How to Bet on the Underdog | Matt Curtolo | Superclusters | S5E6

matt curtolo

“The bigger you get, the more established you get, the more underwriting emphasis goes into how this team operates as a structure rather than is there a star?” – Matt Curtolo

Matt Curtolo, CAIA is a seasoned private markets investor and allocator with over two decades of experience at leading financial institutions. Throughout his career, he has been directly responsible for allocating more than $6 billion in commitments to private market investments and maintains relationships with hundreds of general partner relationships across the full spectrum of private capital strategies.

Most recently, as Head of Investments at Allocate, a venture-backed fintech startup. Matt built the investment capability from the ground up, broadening access to top-tier venture capital opportunities for the private wealth market. Prior to this, he served as a senior leader at MetLife, serving on the investment committee, co-managing their global alternatives portfolio and leading the firm’s US Buyout portfolio. Earlier in his career, Matt led all private equity activities as Head of Private Equity at Hirtle Callaghan, a large independent outsourced Chief Investment Officer (oCIO). Matt’s foundational experience was gained at Hamilton Lane during its early growth phase, before it became the world’s preeminent private markets allocator, in research, investment and client-facing roles. Matt currently holds several advisory positions that span start-ups, asset management firms and fund of funds. He also manages his own advice practice, providing GPs with strategic guidance on strategy, fundraising and investor relations.

You can find Matt on his socials here:
LinkedIn: https://www.linkedin.com/in/matt-curtolo-caia/

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

OUTLINE:

[00:00] Intro
[04:24] What town did Matt grow up in?
[04:37] Why is that town significant from a sociological perspective?
[08:43] Why is Matt fascinated with the Detroit Lions?
[11:08] What is it like cheering for the underdog?
[13:02] How does Matt break down deal attribution in partnerships?
[18:04] GPs’ karmic bank account
[21:29] What is the kindest thing anyone’s done for Matt?
[23:24] How did tennis enter Matt’s life?
[26:35] Historical examples of VC management/leadership structures
[29:33] Underwriting track record between senior and junior investors
[32:23] How Matt approaches diligence after reading the data room
[39:30] How do you know when you’ve asked enough questions?
[42:37] The three classes of questions for GPs that influence investment decisions
[45:34] Remote culture
[50:16] Cadence of in-person gatherings in remote teams
[52:48] The two (and a half) types of conversations to always host in-person
[58:37] The last great idea Matt had on a walk
[1:02:05] The legacy Matt wants to leave behind
[1:04:37] Post-credit scene

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“Partnerships are incredibly hard to evaluate because not only are you evaluating each of the individual’s capabilities independently, but is it a one plus one equals three situation?” – Matt Curtolo

“The bigger you get, the more established you get, the more underwriting emphasis goes into how this team operates as a structure rather than is there a star?” – Matt Curtolo

“Data gives me questions, not answers.” – Matt Curtolo

“The dopamine you get from planning something versus the actual experience itself are wildly different.” – Matt Curtolo


Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
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Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!


The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.

You’re Looking at Networks Wrong | Albert Azout | Superclusters | S5E5

albert azout

“Networks are more persistent than performance.” – Albert Azout

Albert Azout is the Co-Founder and Managing Partner of Level Ventures, a technology investment firm built on software and data science and invests in both entrepreneurs and venture capital managers, including the likes of Air Street Capital, Emergent Ventures and Work-Bench, just to name a few. Prior to Level, Albert has been a serial founder, starting analytics businesses and even a social media company before Facebook.

You can find Albert on his socials here:
LinkedIn: https://www.linkedin.com/in/albertazout/
Substack: http://albertazout.substack.com/

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

OUTLINE:

[00:00] Intro
[02:36] The origin of Albert’s blog
[04:45] How did Albert first start coding?
[07:43] Albert’s interest in networks
[13:10] Entrepreneurship around Albert
[16:27] What is collaborative filtering?
[22:18] How complexity economics affect the networks of VCs?
[27:14] Fear and greed regimes
[28:51] Telltale signs that inform the kind of regime you’re in
[30:31] Why it’s the wrong time to be investing in defense tech
[34:53] What are most LPs missing about GP networks?
[37:31] How is Level Ventures looking at networks differently?
[44:42] Archetypes of GPs that Albert likes
[46:43] The 3 advantages GPs need to have
[55:02] How does Albert balance over- vs under-diligencing?
[57:15] Albert’s view on luck
[57:47] Albert the “consciousness expert”

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“You have to have an understanding of the regime you’re in for you to make good decisions as an investor.” – Albert Azout

“Price reflects the inefficiencies of the market.” – Albert Azout

“What really matters is what you’re hearing around you. When you hear overly coherent narratives, that’s a big thing for me. And it happens in subcycles as well. […] But when people are behaving and making decisions based on narratives that are overly coherent, that’s a big sign. That’s a very social problem.” – Albert Azout

“What you want to see in a venture company which you’re looking for huge outliers, is you want to see increasing returns to scale. You want to see demand-side feedback loops, where you have very low marginal costs of distribution. And that requires mostly winner-take-all, or winner-take-most kinds of markets.” – Albert Azout

“You want to be pre-narrative. You want to position your capital in an area where the supply of capital increases over time and where those assets will be traded at a premium.” – Albert Azout

“Networks are more persistent than performance.” – Albert Azout

“Venture is simple but hard.” – Albert Azout

“We look for GPs who have one, a network advantage and two, a knowledge advantage – both of which have to be not redundant and economically important. And the third thing is the fund strategy itself. There’s a lot of nuances but there are two things that are important. One is that it has to be an outlier. […] It has to have the right construction for us. […] My second point is more important. It involves game theory, which is the competitive dynamics in the market. ” – Albert Azout


Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on TikTok: https://www.tiktok.com/@super.clusters
Follow Superclusters on Instagram: https://instagram.com/super.clusters


Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!


The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.

When an Olympic Daydreamer Becomes an LP Whisperer | Asher Siddiqui | Superclusters | S5E4

asher siddiqui

“What I hear from LPs is that the market is important. And of course, the market IS important. And I think that that’s true. But if you truly believe in venture as a purist, then all of it is irrelevant because at any point in time, someone will come and have this unique insight. And the timing is against them. The world is against them. They’re in the wrong place at the wrong time, and yet, they have this unique insight at this point in time. They have the opportunity to invest at this point in time. And so, just because the timing is wrong doesn’t mean you shouldn’t be backing them. Because they might be right. And you might be missing out on the best opportunity in your lifetime.”

Asher Siddiqui is a global tech investor, M&A dealmaker, and venture fund builder with over 25 years of hands-on experience across venture capital, entrepreneurship, and more than $15B in executed M&A transactions.

He began his career as a software engineer and entrepreneur in the US and UK before spending a decade leading M&A and corporate venture at Etisalat Group (now e& Group), one of the world’s largest listed TMT investment groups. There, he led acquisitions, exits, and strategic transactions across multiple continents.

In 2016, Asher joined the global leadership team at 500 Startups in San Francisco, helping scale the platform to $2B+ AUM, with a portfolio that includes 35+ unicorns and 160+ centaurs.

Since then, he has helped launch and scale several institutional VC firms—including Race Capital, Lumikai, Sukna Ventures, Zayn VC, and Humanrace Capital—and serves on the advisory boards of funds such as FootPrint Coalition Ventures, Merus Capital, and The Treasury.

To date, Asher has made 100+ venture investments (both direct and LP), raised hundreds of millions in LP commitments, mentored hundreds of emerging VC managers globally, and advised countless founders.

You can find Asher on his socials here:
LinkedIn: https://www.linkedin.com/in/ashersiddiqui/
X / Twitter: https://x.com/ashercdkey

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

OUTLINE:

[00:00] Intro
[03:36] Why doesn’t Asher like the saying ‘The sky’s the limit?’
[07:20] The launch of CNBC Africa
[15:25] How do two competing personalities create one of the largest media empires in the world?
[17:39] Combining vision and execution
[21:22] Asher’s framework for executing on a vision
[31:00] Why Asher was the youngest Global Head of M&A of a major telecom business
[43:57] What sets a great investor apart from a great fund manager
[45:27] Roleplaying a GP thinking about secondaries
[51:44] What do most LPs underestimate and overestimate
[58:24] Most telling predictors of outperforming GPs
[1:07:13] The best wine and food for each situation
[1:12:25] Asher’s Vinod Khosla story

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“The best opportunities are the opportunities that aren’t obvious to anyone.” – Asher Siddiqui

“Execution is nothing without a vision, and vision is nothing without execution.” – Asher Siddiqui

“If only there was an Olympic sport called daydreaming, then Asher will be a gold medalist every time.” – Asher Siddiqui’s mom

“What was less relevant was the number; what was more important was the process.” – Asher Siddiqui

“If you ask the baseline obvious questions, you get the obvious responses.” – Asher Siddiqui

“You have to be thinking about exits because if you’re so laser-focused on building your portfolio and not thinking about exits, then maybe you’re a great investor, but not a great fund manager.” – Asher Siddiqui

On investors selling secondaries… “You may choose to take some off the table. And this is a market risk, not a specific lack of belief in the founder. I cannot tell you what the right answer is. What I can tell you is what I’m interested in backing are fund managers that are in the pursuit of truth, and they’re making the best judgment calls in the pursuit of truth that they can at this point in time, based on the data they have available.” – Asher Siddiqui

“There is no right or wrong answer. Because you may get it right this time – you may get it wrong this time – what matters is-… This is Fund III, right? What about Fund VI or Fund VII or Fund VIII? Are you building a culture for you to continue to build a team that has this culture to continuously follow and pursue this pursuit of truth for the best outcomes based on the process that you have, as opposed to just shooting from the hip and gut instinct, which is great while you’re around. But when you retire and your firm’s going on, you’ve basically created a culture where people shoot from the hip and maybe the people who come after you are not as good as you.” – Asher Siddiqui

“Exiting a position in a company to return DPI to LPs is not a reflection of your stance on the company, but your stance on the market.” – Asher Siddiqui

Why LPs should go to annual meetings… “I’m looking for a minimum of one insight that I can take away, and I’m hoping to ask one intelligent question that will stand out as a credible LP in the minds of the GP.” – Asher’s Swedish pension allocator friend

“What I hear from LPs is that the market is important. And of course, the market IS important. And I think that that’s true. But if you truly believe in venture as a purist, then all of it is irrelevant because at any point in time, someone will come and have this unique insight. And the timing is against them. The world is against them. They’re in the wrong place at the wrong time, and yet, they have this unique insight at this point in time. They have the opportunity to invest at this point in time. And so, just because the timing is wrong doesn’t mean you shouldn’t be backing them. Because they might be right. And you might be missing out on the best opportunity in your lifetime. And that’s what is beautiful. That it is a people game.

“So, when I hear people talk about scaling venture, what the fuck are you talking about? Venture is not scalable. There are things that you can scale. There are processes that you can scale. But ultimately, you still have to rely upon finding those people and finding them at the right time – and the right time could be the ‘wrong’ time – but finding them when they find that opportunity and when they see that meaningful insight. I’ve heard people say it’s not thesis-driven; it’s market-driven. No, I disagree. I think it’s both of those. But actually it’s individual-driven if you can find that person.” – Asher Siddiqui


Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on TikTok: https://www.tiktok.com/@super.clusters
Follow Superclusters on Instagram: https://instagram.com/super.clusters


Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!


The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.

My Advice is Better than Your Advice

clown, stormtroopers, different

One of my favorite Hunter Walk lines, and one I cite quite often is: “Never follow your investor’s advice and you might fail. Always follow your investor’s advice and you’ll definitely fail.”

Investors are more likely to drive a company to the ground than otherwise. Founders listen to the advice of people they deem to be more senior and more experienced than them, as if they were written into the Bible. The cold, hard truth for people who give advice is that:

  1. Not all advice is created equal and most advice is situational.
  2. Your advice is more likely to be useless than useful in the aggregate supply of advice.

Advice should always be taken with a grain of salt. And oftentimes, certain pieces of advice is overweighted given the brand of the person giving it (who is right vs. what is right) and/or given the number of times the advice is given.

I’m lucky enough to be asked to be an advisor to a small number of funds, startups, and non-profits. Nothing to ever be worth bragging about. In fact, sometimes I wonder why I have a seat at the table. Nevertheless, lucky to share a drink with people smarter than me. I also realize that I’m a work in progress, and love to learn, just for the sake of learning. I’m not the famous person in the room, nor am I the most experienced person in the room.

So…

  1. I always preface my advice with “Take this with a grain of salt, and this is purely my opinion – one among many others. I trust you to make the final judgment call of what makes the most sense.”
  2. I give the unorthodox opinion. If I don’t have one, I don’t share any advice. I will caveat that I play in the early stages of company formation, when organizations are more so the pirates than the navy. When things are non-obvious, and need to fight to have a seat at the table. And given that the company and/or fund’s job is to question the status quo, I believe it is my job is to enable the founders to consider unorthodox paths. The minimum I can do is suggest that even if my advice is wrong, there are more paths than the one or two options we have in front of us. Or as Mike Maples writes in his book Pattern Breakers, “breakthroughs require pattern breaking.”

All in all, is my advice better than yours? Or anyone else’s? Who knows? But at least it’s different.

Photo by Mulyadi on Unsplash


Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!


The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.

Why Individuals Can Be Better than Teams | Sean Warrington | Superclusters | S5E3

sean warrington

“Some of the best investments, as we look back in history, were never obvious at the moment the investments were made. You may not have to be contrarian, but you have to have a variant perception than the rest of the market. Maybe you saw the team differently. You saw the space growing differently. That, to us, inherently, is a single decision maker-type thought process at the earliest stage, when it’s less about metrics. It’s more about how you evaluate the talent and the team.” – Sean Warrington

Sean Warrington leads private market investing at Gresham Partners, a $10 billion multi-family office based in Chicago. Known for being a transparent and user-friendly LP, he and the Gresham team aim to simplify the fundraising process — offering single-check investments, a streamlined diligence process, and prompt, candid feedback to GPs.

You can find Sean on his socials here:
X / Twitter: https://x.com/srwarrington
LinkedIn: https://www.linkedin.com/in/srwarrington/

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

OUTLINE:

[00:00] Intro
[03:29] Who is Jeff French?
[05:26] The metrics for success for a junior LP
[07:20] The 3 chapters of Sean’s evolution as an LP
[11:05] Sean’s first investment
[14:44] When GPs put LPs on strict timelines
[16:53] One archetype of GP that Sean is excited about
[19:37] What it looks like to be thoughtful when growing AUM
[23:16] What most LPs don’t understand about solo GPs
[25:58] What happens when a GP leaves a partnership
[27:33] The definition of LP/GP alignment
[30:47] Reference archetypes and how to find them
[35:32] How to manage bandwidths in a small team
[38:58] Frameworks for taking calls
[42:26] How much does Sean travel?
[43:25] Why coffee chats don’t work
[45:30] What Sean’s changed his mind on about investing
[47:12] What did Jason Kelce’s retirement mean to Sean?
[49:36] Post-credit scene

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“If you’re 60-70% of the time picking good managers, I think you’re pretty good at this industry.” – Sean Warrington

“Frameworks are not foolproof. What they’re designed to do is help us focus on places where we can get to an eventual yes.” – Sean Warrington

“We don’t want a slow no. A slow no is bad for everybody.” – Sean Warrington

“Some of the best investments, as we look back in history, were never obvious at the moment the investments were made. You may not have to be contrarian, but you have to have a variant perception than the rest of the market. Maybe you saw the team differently. You saw the space growing differently. That, to us, inherently, is a single decision maker-type thought process at the earliest stage, when it’s less about metrics. It’s more about how you evaluate the talent and the team.” – Sean Warrington

“One thing LPs are bad at remembering is we are exceptionally diversified investors. For us, to have anything even be 1% – even a manager being a single percent of the overall pool of capital – is very difficult to do. Many times we’re talking about basis points.” – Sean Warrington

“The big risk that LPs don’t appreciate… There’s this view that these two- and three-person teams coming together create this better judgment. What they’re not factoring in is that these are somewhat forced marriages. These are people who may or may not have long histories together. They may not have great bedside manner when they’re in the thick of it.” – Sean Warrington


Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on TikTok: https://www.tiktok.com/@super.clusters
Follow Superclusters on Instagram: https://instagram.com/super.clusters


Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!


The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.

You’re Doing Diligence Wrong | Raviv Sapir | Superclusters | S5E2

raviv sapir

“Most references will not give a negative reference about someone, but you will have to understand and listen between the lines. What is a good or a bad reference? They might say, ‘I really like him as a person. He’s really nice.’ But this is a person that’s worked together with you in a team, and you’re not saying he’s great with founders or finding the best deals. Maybe he’s not that good.” – Raviv Sapir

Raviv Sapir is an early-stage investor at Vinthera, a fund of funds and venture firm with a hybrid strategy that combines VC fund investments with direct startup investments. With a background in tech and finance, an MBA from HEC Paris, and years of experience mentoring startups and supporting LPs, Raviv brings a sharp eye for high-conviction opportunities and a practical approach to venture. He previously held product roles at leading Israeli startups and served in a technological unit within the Israeli Defense Forces. His work across geographies, sectors, and investment stages gives him a uniquely holistic and global perspective on the venture ecosystem.

You can find Raviv on his socials here:
LinkedIn: https://www.linkedin.com/in/raviv-sapir/

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

OUTLINE:

[00:00] Intro
[03:31] Swimming since he was 7
[09:49] Breaking down each GP’s track record and dynamics in a partnership
[11:25] Telltale signs that a partnership will last
[12:50] An example of questionable GP dynamics
[21:45] Virtual partnerships
[25:43] GPs working out of coworking spaces
[28:30] Commonly held LP assumptions
[32:16] A big red flag GPs often say
[34:27] What does Raviv look for during reference calls?
[39:41] How does the diligence change for a Fund I/II vs Fund III/IV?
[42:26] Qualitative traits Raviv likes to see in a Fund I GP vs Fund II+ GP
[44:04] Ideal cadence of reporting and LP/GP touchpoints
[46:03] Role of the LPAC across different funds
[48:47] Diligence as a function of check size
[54:37] What’s Raviv’s favorite episode of Venture Unlocked?
[56:23] The podcasts that Raviv listens to

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“Some of the small funds perform better but a lot of them–… they perform much worse because the variance in their performance is so big. You might have good odds of succeeding with a small fund but very high odds of performing way worse than the bigger funds.” – Raviv Sapir

“GPs are great at selling. ‘Every time is the best time to invest.’” – Raviv Sapir

“Most [references] will not give a negative reference about someone, but you will have to understand and listen between the lines. What is a good or a bad reference? They might say, ‘I really like him as a person. He’s really nice.’ But this is a person that’s worked together with you in a team, and you’re not saying he’s great with founders or finding the best deals. Maybe he’s not that good.” – Raviv Sapir

“‘Interesting’, especially in the US, is used in a negative way.” – Raviv Sapir


Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on TikTok: https://www.tiktok.com/@super.clusters
Follow Superclusters on Instagram: https://instagram.com/super.clusters


Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!


The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.

#unfiltered #94 Is Conviction Black and White?

flower, black and white

I’ve heard a collection of sayings around conviction.

“Do or do not; there is no try.” Yoda.

“Get to 70% conviction. 90% means you’re too late. 50% means you haven’t done your homework.” Keith Rabois.

“Do half-ass two things; whole ass one thing.” Ron Swanson.

But the one that stands out the most is: “You either believe or you don’t.” Which I’ve heard many an LP tell me on the podcast. But also across VCs I’ve met over the years. And in full transparency, I struggle with that. Theoretically it makes sense. Building 99% of a car still means you don’t have a working car. There are a thesaurus of synonyms alongside, “I just don’t believe in you.” We’ve all heard it.

“You were an amazing candidate, but unfortunately, the talent pool was really competitive and we decided to move on with someone else. But please do apply again for a job that may be a better fit for you.”

“It’s not you; it’s me.”

“We’re just in different chapters of our lives. And we deserve to meet someone who is where we are.”

“You’re too early for us.”

“You’re out of scope.”

“I just have too much on my plate now, and I just don’t have the bandwidth to focus on this now.”

“Let me run this by my hiring/investment committee/leadership.”

All that just mean “I don’t believe in you.” (But it makes me feel like an asshole if I said it directly to your face. And I don’t want to be perceived as an asshole.) Ashamedly so, I’ve used a few of these myself.

In the investing world, I wonder if there are varying levels of conviction. Phenotypically expressed in varying check sizes. In fact, we have terminology for it now. Core checks. And access checks, or discovery checks, or simply, non-core checks. A core check is a substantial position. A meaningful percentage of the overall fund size. At least 1%. But depending on the portfolio construction, it varies from 1-5% of the fund. A discovery check, on the other hand, is smaller. Oftentimes, less than 0.5% of the fund size. Dipping one’s toes into the water so to speak, as opposed to a headfirst dive or a cannonball to extend the metaphor.

But if conviction really is black and white, should there be varying levels of conviction? Is there such a thing as believing in someone, but only half as much? Or a third as much as someone else?

Moreover one of the greatest lessons we learn over time as investors is that we’re quite terrible, over large sample sizes, with predicting winners out of our portfolio. The three to five biggest winners that put you on the roadmap are often not our three to five “favorite” investments ex ante.

A really good friend of mine once told me (mind you, that both my male friend and I are heterosexual), “The conviction you have in someone to be your girlfriend is different from the conviction you have in someone who is to be your wife. You build that trust over time. And what you look for is different over time.”

So back to the original question: Is conviction black and white? Is there really only belief and disbelief? Is there such a thing as I kind of believe? Or I believe but…?

While I don’t have a black and white answer to this black and white question, I’m inclined to believe yes. It is black and white. It just depends where you put the bar. The bar for you to date someone is different from the bar for you to marry someone. The bar to approve an investment to return a $10M fund is different from the bar to return a $1B fund. And, the bar to invest in an asset in a power law-driven industry, like venture, is different from the bar to invest in an asset in a normally-distributed industry, like real estate or public markets. What’s black for one is white for another.

Photo by Jan Kopřiva on Unsplash


#unfiltered is a series where I share my raw thoughts and unfiltered commentary about anything and everything. It’s not designed to go down smoothly like the best cup of cappuccino you’ve ever had (although here‘s where I found mine), more like the lonely coffee bean still struggling to find its identity (which also may one day find its way into a more thesis-driven blogpost). Who knows? The possibilities are endless.


Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!


The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.

How to Start a Single Family Office | Scott Saslow | Superclusters | S5E1

scott saslow

“A lot of family office principals, unless they’ve worked in finance – they should not be solely making the decision on which RIA to hire.” – Scott Saslow

Scott Saslow is the founder, CEO, and family office principal for ONE WORLD. He’s also the founder and CEO of The Institute of Executive Development, as well as the author of Building a Sustainable Family Office: An Insider’s Guide to What Works and What Doesn’t, which at the time of the podcast launch is the only book written for family office principals by a family office principal. Scott is also the host of the podcast Family Office Principals where he interviews principals on how families can be made to be more resilient. Prior, he’s also found independent success at both Microsoft and Seibel Systems.

You can find Scott on his socials here:
LinkedIn: https://www.linkedin.com/in/scott-d-saslow-46620/
Website: https://www.oneworld.investments/
Family Office Principals’ Podcast: https://oneworldinvestments.substack.com/podcast

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

OUTLINE:

[00:00] Intro
[02:09] The significance of ‘ojos abiertos’
[05:49] Scott’s relationship with his dad
[07:46] The irony of Scott’s first job
[11:19] Family business vs family office
[13:50] The corporate structure of a family office
[17:39] From multi family office to single family office
[18:54] The steps to pick a MFO to work with
[22:37] The 3 main functions a family office has
[31:00] Why Scott passed on SpaceX
[36:07] Why Scott invested in Ulu Ventures
[44:23] What makes Dan Morse special

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“A lot of family office principals, unless they’ve worked in finance – they should not be solely making the decision on which RIA to hire.” – Scott Saslow

“The three main functions that family offices tend to have are investment management, accounting and taxes, and estate planning and legal.” – Scott Saslow


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The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.

Insider is Spelled with Two I’s

welcome, inside

In a previous era, in a more disconnected world, prior to social media and instant cellular connection, not everyone knew everyone. Information was traded in hushed rooms. And so, who you knew became the modicum of influence. The definition of being an insider.

Today who you know no longer matters. Networks overlap. There are tons of third places that bring people together for off-the-record discussions. And just knowing someone isn’t enough to exert influence. The network of who I know is just as large or small as the next person over. While people still use who you know as the proxy for being an insider, that definition has lost its luster. Because even if you didn’t know someone, almost everyone is one click, one message, or one email away.

It’s no longer about who you know, but about who trusts what you know. If two people were to send the same email forwardable to me, I’m more likely to take the email intro from the person I trust more.

It’s even more important when it comes to references and diligence. Most allocators who invest in the venture world aren’t as connected. For the most part, if this isn’t the only asset class they’re involved in, they don’t have to be. They’re paid to be generalists. And by function of that, when they do their on-list references, it’s hard to get the raw truth from the strangers they talk to. It’s different if you live and breathe this space. Then you need to know enough people well where either they can serve as the reference or vouch for you to a reference. That requires not only knowing the right people, but also maintaining a strong bond with them.

I can’t speak for other industries as much, though I imagine it may be quite synonymous with venture. But in venture, most people trade favors. It’s a relationship-driven business for a reason. The problem is most people only make withdrawals from their karmic bank account. Many of whom are in karmic debt. Rather than karmic surplus. VCs especially.

There’s this tweet Brian Halligan of Hubspot fame wrote that I stumbled upon yet I quite like.

The humble truth is that some people say I’m an insider. Yet, I don’t think I am. I know a certain few people really, really well. I know many people kind of well. And I know jack shit about the vast majority of people in our industry. I’ve always thought that my number one priority is to do right by the people I do know. I’ve also been blessed they’ve been kind enough to let me and have vouched for me.

There was a line that RXBAR’s Peter Rahal said recently that really stuck with me. “Strategy is choosing what not to do.” To analogize that to an insider, in my experience, a true insider is an insider because they choose who not to spend a disproportionate amount of time with. An insider is often not cavalier with how they spend their time and who they spend their time with. They’ve either learned from scar tissue or model the ability of others who are insiders.

So, at the end of the day, ask yourself honestly:

  1. Who do I know?
  2. Who trusts what I know?

Photo by Marissa Daeger on Unsplash


Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!


The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.

Single Close vs Multiple Closes

traffic lights

The ideal situation for a GP is that you have a single close. All LPs who are interested all confirm their participation by the same deadline. And all wires for the first capital call come in at the same time. It’s the utopia. Unfortunately, reality isn’t as picturesque. The truth is the vast majority of LPs wait till the final close, and as long as you have multiple closes, there is no urgency to commit by a certain date.

In fact, it’s almost always better to commit as late as you can if there are multiple closes. Investing in funds is investing in a blind pool of human potential. The blindness scares and humbles many allocators. It is in our interest to invest in the least blind pool of potential possible. And usually, when there are multiple closes, the GP(s) start deploying before the fund closes. So if you come in at the end, you at least get to see 10-20% of the portfolio. Sometimes more, as most LPA clauses stipulate that the final close must happen within 12-18 months from initial close. Of course, you can always move that date via LP votes or just not having that clause in the LPA in the first place.

Single CloseMultiple Closes
LP NetworkRobustWeak
LP Check SizeLargeSmall
# of ChecksFew
(most of the time)
Many
(first close is usually
existing LPs/friends and/or anchor)
DeploymentDeploys after the closeCan deploy after the first close
(while still fundraising
for the rest of the fund)


With single closes, while it helps to get it all one and done, you can’t deploy until you’ve closed. If your network with LPs and your trust with those respective LPs isn’t great, it’s more risky to go for a single close. Many LPs also have different timelines. So, instituting a single close means you need to be firm and align LPs on your timeline. It helps if you have a few large chunks that cover more than 50% of the fund before you set a close date.

With multiple closes, the good news is that you leave the door open for LPs who run processes on their own timelines. And that you can deploy as you’re still fundraising, as long as you get past the first close. The downside is that there’s no urgency for anyone to come in before the final close. It’s better if you don’t have a network of strong LPs, which pertains to the vast majority of first-time fund managers.

So, what to do?

Let’s get the single close strategy out of the way first. First of all, to do this, you need to come from a place of privilege. You must have a large amount of market pull. LPs who are dying to give you money. And for better or worse, not that you have to take them, people who would give you a blank check. Although, as a footnote, beware of the blank checks. More often than not, they’re easily disappointed.

You must have a strict process. And LPs need to self-select themselves in or out of the process very early in the process. Most important part of this, which is often a really hard thing to do for a lot of first-time GPs, you need to be intellectually honest with yourself if an LP is a fit for you or not. Your job is to figure that out before the LPs figure it out. And as soon as you do, you need to “fire” that prospective LP before they tell you no.

For that, even though you may lose the potential of a transaction, in my experience, you often win their respect.

Assuming what the LP invests in is what you are offering, manage your drip campaign well. Do your best to throttle opportunistic asks that deviate from your process. But do so with grace. And I can’t underscore grace enough.

Some things I’ve seen in the past for funds who can close a fund in a single close (none of the below are the Bible, but hopefully tools for the toolkit):

  • The deck is never sent out before the first meeting.
  • If the deck is sent out before the first meeting, it is either only a teaser deck (less than five slides) or the GP/IR team says something along the lines of: “If we don’t hear back from you within three days, we will assume our fund is out of scope, and will prioritize our time with other investors.”
  • The data room opens up on a very specific date. None get access to it before (except for existing LPAC members, and sometimes existing LPs who’ve indicated early interest).
  • The data room closes on a very specific date. No one will get access to it after. The sub docs need to all be signed within a week or two after.
  • No additional calls with LPs unless they can commit a meaningful check to the fund. Usually double digit percentage of the fund size.
  • LPs get little to no additional asks. No side letters.
  • Communication from the GP/IR team throughout every step of the way is paramount.

Again, a single close is a privilege. And a power. And with great power comes great responsibility, as a wise old uncle once told a budding superhero.

Ok, multiple closes. I often treat Fund I’s different from the other funds. One of the few major differences is that you don’t have existing LPs. Instead, you have friends and family and people who’ve believed in you before. Nevertheless, early momentum is always a good thing to have before you officially open up the fundraise.

The first close is ideally the minimum viable fund size for you to deploy your strategy and/or the fund size you need to prove out the minimum viable assumption before you raise your next fund. It’s helpful to assume you won’t be able to raise anymore after the first close. While usually not true, but nevertheless, a useful mentality. Most GPs close too small of a first close that still constrains them from truly deploying their strategy. For instance, for Costanoa Ventures Fund I in 2012, the first close was at $40-50M on June 7th, 2012, but ended up at $100M at the final close.

For each of the closes, I generally wouldn’t recommend different economic terms, like reduced fees for earlier LPs. I get the incentives. But two reasons:

  1. LPs talk. It’s usually not a good look among LPs if they know that other people at your AGM got better terms than they did.
  2. You’re discounting your value. If you’re investing in an asset class that’s truly transformative and you truly have better access than others, don’t short sell yourself.

That said, I do believe you should reward early believers. Either for those that come in via Fund I or first or second closes. Or both.

Many LPs especially high net-worth individuals (HNWIs), family offices and corporates love co-investment opportunities. Realistically, these will be 90-100% of your Fund I LPs. Leverage that. For instance, first-close LPs get unfiltered access to SPVs/co-investment opportunities. Maybe, opportunistic intros to portfolio companies as well. Second-close LPs get access to all SPVs, but are capped on allocation, assuming the opportunity is oversubscribed. Final-close LPs get last pick.

If you’re raising a Fund II+, first-close LPs can be given SPV access to deals coming out of earlier funds as well. Although, use this strategically so that your Fund I LPs won’t feel slighted.

As you might surmise already, there is no one right answer. Oftentimes, it’s a function of who you know, how quickly they commit, and how obvious you are to them. “Obviousness” is a product of track record, your brand, the quality of your reference checks, and obviously, how complex your story is.

And there will always be exceptions. 🙂

Photo by Etienne Girardet on Unsplash


4/13/2025 Edit: Example of Costanoa Ventures’ first close


Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!


The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.