Tag: superclusters

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What Your Lawyer Isn’t Telling You About LPA Terms | Apurva Mehta & JD Montgomery | Superclusters | S7PSE1

apurva mehta, jd montgomery

“Our best GPs are talking to their founders all the time. And our best GP relationships, we talk to all the time.” — Apurva Mehta

“If you can’t handle something going to zero, then you shouldn’t do one.” — JD Montgomery

Apurva Mehta is the co-founding Managing Partner of Summit Peak Investments, a fund-of-funds that boasts a portfolio of both venture fund investments and direct investments, including the likes of Affirm, Anduril, Airtable, Opendoor, and Wish, just to name a few.

Prior to starting Summit Peak in 2018 with his co-founder, Patrick O’Connor, he previously served as Vice President and Deputy Chief Investment Officer for the Children’s Hospital Endowment Portfolio in Fort Worth, Texa. From 2008 to 2011, he was the Director of Portfolio Investments at The Juilliard School in New York City. Apurva began his career in investment consulting and investment banking at Citigroup and Lehman Brothers. He was recognized for his expertise when he was named to aiCIO Magazine’s Top Forty Under Forty in 2012 and 2013 and honored as a Rising Star by Institutional Investor. He holds a BBA in Finance from The George Washington University.

You can find Apurva on his socials here:
LinkedIn: https://www.linkedin.com/in/apurvaamehta/

JD Montgomery leads the Family Office division at Canterbury Consulting and is a seasoned advisor with nearly four decades of experience serving prominent families with a focus on strategy, organization and measurement. Based in Newport Beach, he serves a select group of multi-generational families and helps them navigate the complexities of wealth, purpose, and legacy. Mr. Montgomery partners with his clients to help them optimize the allocation of their resources across generations. Over the years, Mr. Montgomery has developed a deep network of relationships in the venture capital industry. He has helped his clients gain meaningful exposure to venture funds and direct investments and develop relationships with leading innovators and investors globally. He is a Managing Director, shareholder, and board member at Canterbury Consulting. He graduated from Stanford University and holds the Chartered Alternative Investment Analyst (CAIA) designation.

You can find JD on his socials here:
LinkedIn: https://www.linkedin.com/in/jd-montgomery-6161341b/

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

OUTLINE:

(00:00) Intro
(01:53) How did this episode come to be?
(06:56) What do LPs get right/wrong with co-invests?
(12:06) GP best practices for co-investments
(14:35) How do you know a GP is capable of pre-empting a round?
(16:37) How often should GPs be talking to their portfolio founders?
(17:52) Why Apurva goes to AGMs
(18:17) How Apurva/JD stays in touch with GPs
(23:33) The ask
(24:01) Solo GPs
(31:42) Types of solo GPs who join multi-stage firms later
(34:32) What’s the skew in the benchmarking data?
(39:22) What lawyers don’t tell you about carveout capital in LPAs
(44:46) LPA terms that LPs redline
(45:44) Carry ratchets that LPs hate
(48:15) How higher fees impact IRR
(49:39) Outlandish fees on SPVs
(50:49) How much should a GP’s salary be?
(52:56) Cashless GP contributions
(53:59) Do $1T outcomes change venture math?
(59:17) Should private market investors be public market investors?
(1:04:30) What made Apurva nervous? What does he love?
(1:07:57) What does JD love?

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“If you can’t handle something going to zero, then you shouldn’t do one.” — JD Montgomery

“Our best GPs are talking to their founders all the time. And our best GP relationships, we talk to all the time.” — Apurva Mehta

“If I’m going to an AGM to learn about what’s going on in our portfolio, I am not doing my job.” — Apurva Mehta

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
For Superclusters After Hours: ⁠https://superclusterslp.substack.com/⁠
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP

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, bus

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How Value Add Differs in PE vs VC | Julia Rees Toader | Superclusters | S7E6

julia rees toader, princap

“In private equity, some of the older tricks about just picking on more leverage are not going to work as well now because rates are higher. We need to have more focus on operational improvement and margin expansion. And in venture, you’re not expected to have good margins.” — Julia Rees Toader

Julia Rees Toader is the Founding Partner of PrinCap, an independent investment portfolio strategy firm working with institutions and individuals on manager selection, asset allocation, and strategic advisory. Prior to PrinCap, she was the Head of Portfolio Strategy and Head of Relationship Management at Heritage Holdings, a multi-family office. Before Heritage, Julia was the head of Portfolio Strategy at Goldman Sachs Asset Management ($3Tr assets under supervision). She and her team advised sovereign wealth funds, pensions, financial advisory firms, private banks, and other long-term asset owners on asset allocation. She studied mechanical engineering and computer science at Princeton University and is a CFA charterholder. Before Goldman Sachs, she worked on M&A and business development for an early-stage medical device biotech firm.

You can find Julia on her socials here:
LinkedIn: https://www.linkedin.com/in/julia-rees-toader-cfa-22871030/

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

OUTLINE:

(00:00) Intro
(01:38) A ‘happy accident’ at 16
(04:03) Julia’s first startup experience
(06:32) Why did Julia join Goldman Sachs?
(07:30) When did Julia’s appreciation for finance start?
(08:05) Conversations around the Rees and Toader dinner table
(09:48) Finance vs mechanical engineering
(13:26) On exceptional talent
(15:18) How to keep a cool head when you’re successful
(20:19) Do small emerging managers outperform?
(22:27) How do you know if a GP is founder-friendly?
(23:39) The bad pitch meeting
(25:00) Value adds in PE vs VC
(29:49) Difference between PE vs VC portfolio construction models
(31:19) Timelines to return in PE and VC
(33:17) Secondaries
(34:34) The ethics of continuation vehicles
(36:07) The subscription ask
(36:40) Are all secondaries created equal?
(38:30) What is 10+1+1?
(40:32) Hedge funds looking like private market funds
(41:16) What do you do when you have $3B?
(44:43) What is home country bias?
(46:40) How do you know you’re overweighted on allocation?
(47:15) The endowment effect in secondaries
(48:32) Leaderless investment committee sessions
(49:52) The merits of GP stakes
(54:10) Why private credit is interesting
(56:21) The duration of GP stakes
(57:36) The duration of hedge fund GP stakes
(58:11) How much GP stake is worth it?
(1:00:33) Hedge funds: How much is a good GP stake?
(1:02:00) How much is the max an LP wants to own of a hedge fund?
(1:03:12) Tax structuring is another form of alpha
(1:06:52) Cheetos Pelotazos
(1:09:15) Advice to women in finance
(1:12:28) Post-credit scene: Age of Empires, Starcraft, and Zelda

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“In private equity, you want to have that strong value creation playbook. It used to be that you could do quite well doing mostly financial engineering, roll-ups, that kind of thing. That still works, but I think a lot of the money in the next part of the cycle is going to come from improving the margins or increasing EBITDA, so making operational improvements. So private equity, some of the older tricks about just picking on more leverage are not going to work as well now because rates are higher. We need to have more focus on operational improvement and margin expansion. And in venture, you’re not expected to have good margins.” — Julia Rees Toader

“The providers of liquidity always get paid.” — Julia Rees Toader

“LPs and GPs both don’t want to be forced sellers.” — Julia Rees Toader

“Home country bias is the tendency of people to overallocate to their home market.” — Julia Rees Toader

“The endowment effect, which is the idea that if you own something, you think it’s more valuable than what anyone else is willing to pay for it.” — Julia Rees Toader

“Tax structuring is another form of alpha.” — Julia Rees Toader

“Alpha’s three things: information asymmetry, access, and, actually, taxes.” — Vijen Patel

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.

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Does a VC’s Value-Add Even Matter? | Stacey Kline & Ben Gallacher | Superclusters | S7E5

stacey kline, ben gallacher

“GPs over-index on how that value-add ties into a portfolio strategy.” — Stacey Kline

Stacey Kline and Ben Gallacher are co-founders of February Capital, a fund-of-funds dedicated to providing access to the best in venture. Prior to starting February, they’ve each held roles as professional athletes, corporate lawyers, startup founders, emerging managers themselves, family office allocators, just to name a few.

We spend much of this episode talking about their backgrounds that led them to where they are today, but also on why Stacey and Ben spend so much time underwriting emerging managers’ value-adds, as well as their controversial take on it.

You can find Stacey on her socials here:
LinkedIn: https://www.linkedin.com/in/staceykline/

You can find Ben on his socials here:
LinkedIn: https://www.linkedin.com/in/benjamingallacher/

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

OUTLINE:

(00:00) Intro
(04:03) Why did it take 22 months to set up fund of funds in Canada?
(07:22) Toughest moments when building February Capital
(10:12) How did Ben know he wanted to be an LP?
(12:58) How did Stacey know she wanted to be an LP?
(16:53) The doctor’s advice no one expected
(18:32) Ben’s first NO from Stacey
(23:06) Why is it called February Capital?
(23:58) What is the role of the LP today?
(27:59) What Ben and Stacey look for in GPs
(31:08) When does non-consensus thinking lead to portfolio divergence?
(36:28) How much portfolio overlap is fair for February?
(39:31) How large is February’s portfolio?
(43:17) Picking an ecosystem vs picking an investor
(46:24) What types of GPs did Stacey change her mind on?
(47:56) Underwriting a GP’s story
(49:44) Stacey’s controversial take on value-adds
(53:07) Why value-adds affect sourcing
(57:10) Examples of negative value-add
(59:19) Refreshing your value add
(1:03:36) An example of when GP and founder incentives are misaligned
(1:05:12) The February Capital OS you don’t see

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“What we’re looking for are GPs who are highly convicted in their strategy, where they’re focused on, how they articulate that, and then the proof points that tie the story together.” — Ben Gallacher

“At the end of the day, our job is to take risks.” — Ben Gallacher

“You have to refresh your network every seven years.” — Ben Gallacher citing Josh Kopelman

“It really is fundamentally our job to figure out not to uncover unobvious ecosystems, it’s to figure out who to back in the obvious ones.” — Stacey Kline

“If there’s someone in the operator seat, that’s amazing because they are boots on the ground. It’s really hard to see around corners and they’re the ones who are best positioned to see the world today super, super clearly and know what needs to be built.” — Stacey Kline

“[GPs] can potentially over-index on how that value-add ties into a portfolio strategy.” — Stacey Kline

“Do you end up spending the most time with the companies that are performing really well or with the companies that aren’t? It’s often that companies in a portfolio that are doing really well don’t actually need that much help.” — Stacey Kline

“If I were to defend the GP here on value-add and helping, at the end of the day, you’re just trying to better your sourcing because if you really help a company that’s struggling and they decide it doesn’t work and they start another business, they want to look back and be like, ‘That GP was super helpful to me and they were with me during my hardest times. I’m going to call them because I’m starting a new company and I want them to back me again.’” — Ben Gallacher

“70% of VCs are not value-add at all. They’re just capital and that’s fine. 15% are generally value-add. And 15% are actually negative value.” — Ben Gallacher

“The question is say-do ratio. An old mentor of mine used to say that to me, ‘What’s your say-do ratio? And then our job is basically to audit that. Are founders telling us what you say you’re doing? And does that matter?” — Ben Gallacher

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.

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The 3 Big Family Office Transitions That No One Talks About | JD Montgomery Pt 2 | Superclusters | S7E4

jd montgomery

“To whom much is given, much is expected.” — JD Montgomery

JD Montgomery leads the Family Office division at Canterbury Consulting and is a seasoned advisor with nearly four decades of experience serving prominent families with a focus on strategy, organization and measurement. Based in Newport Beach, he serves a select group of multi-generational families and helps them navigate the complexities of wealth, purpose, and legacy. Mr. Montgomery partners with his clients to help them optimize the allocation of their resources across generations. Over the years, Mr. Montgomery has developed a deep network of relationships in the venture capital industry. He has helped his clients gain meaningful exposure to venture funds and direct investments and develop relationships with leading innovators and investors globally. He is a Managing Director, shareholder, and board member at Canterbury Consulting. He graduated from Stanford University and holds the Chartered Alternative Investment Analyst (CAIA) designation.

You can find JD on his socials here:
LinkedIn: https://www.linkedin.com/in/jd-montgomery-6161341b/

And in case, you’re curious about my reactions during and after recording that episode, you can find my thoughts here on Superclusters After Hours.

You can also find Part 1 of JD Montgomery here.

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

OUTLINE:

(00:00) Intro
(02:00) The definition of family offices
(03:01) Generation 1 vs 2
(06:25) Building a family office at Gen 1
(07:48) The 3 considerations for succession planning
(11:14) The “why” of succession planning
(12:59) Building self-esteem in children
(17:14) How do you help children choose their long-term passions?
(20:16) When should next gen of family offices know how rich they are?
(23:35) How do next gen family office members first get exposure to VC?
(32:25) When do you give next gens influence over the family’s capital?
(35:28) What % of the family capital should you give a next gen?
(37:42) The ask
(38:09) The hard and soft issues of wealth
(42:41) How often do next gens inherit their parents’ support system?
(46:35) How does a GP know how sophisticated an FO is?
(53:43) How does an advisor know an FO’s sophistication?
(59:10) Sophisticated simplicity
(59:50) When’s the last time JD’s OS changed?
(1:05:23) Post-credit scene: Time is a construct

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“[A family office] is a living, breathing organism that is built around people—a family—that’s there to serve them to accomplish their missions.” — JD Montgomery

“There are three considerations: When do I give the next generation visibility? When do I show them all of the zeros? Secondly, when do I give them influence? And lastly, when do I give them control?” — JD Montgomery

“To whom much is given, much is expected.” — JD Montgomery

“It’s impossible to wealth-transfer self esteem. There is some level of wealth that allows next gen to be able to do anything, and there is some level of wealth that allows the next generation to do nothing.” — JD Montgomery

“I don’t want to belong to any club that would accept me as a member.” — Groucho Marx

“I don’t view venture as an asset class. I view it as a methodology to allocate capital to every sector on the planet that’s changing. And oh, by the way, every sector on the planet is changing right now.” — JD Montgomery

“I call it the hard and soft issues of wealth. The hard issues are tax and legal and the economic side. The soft issues really relate to people. Is this individual mature in the development? Have they launched? Are they ready to be a good steward?” — JD Montgomery

“We do surgery with chainsaws, and just hire people to clean up blood.” — JD Montgomery

“Time is something man invented to be able to coordinate action. It doesn’t exist otherwise.” — JD Montgomery citing something a Navy Seal once taught him

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.

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Who Should NEVER Start a VC Fund? | Sam Huleatt | Superclusters | S7E3

sam huleatt

“Lower barriers to entry doesn’t mean higher probabilities of success.” — Sam Huleatt

Sam Huleatt is the co-founder of The Side Letter, a platform driving network-based research for capital allocators. Prior to The Side Letter, he created and ran the The LP Institute at VC Lab, as well as let On Deck Angels at On Deck. Moreover, he’s a serial founder, active angel investor in over 35 companies, and an active allocator in emerging fund managers, including the likes of Notation Capital, Orange Fund, Inuka Capital, Asylum Capital, and more.

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

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

OUTLINE:

[00:00] Intro
[01:34] Sam’s childhood
[03:24] The most persistent myth about Sam he never bothered to correct
[05:47] Bottom-up vs top-down investor
[13:37] Can career VCs develop empathy for the founder?
[18:43] Traits of someone who should definitely start a fund
[26:45] Traits of someone who should NEVER start a fund
[28:09] Air of inevitability
[33:44] Why was Outlander VC inevitable?
[36:11] Where should 60% of your Fund I capital come from?
[41:47] Starting a VC fund is hard
[44:46] Do LPs like GP accelerators?
[51:35] Top 3 considerations for first-time LPs
[58:03] How many GPs should 1st-time LPs meet?
[1:01:06] Governing law of VC: Adverse selection
[1:04:40] Incentive alignment on fees
[1:06:36] Terms in LPAs vs side letters
[1:11:16] What is The Side Letter?

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“A career VC has a lot more experience having been on boards. And because of that, because they’ve been a career VC, they’ve seen more companies operating at scale and the issues that come into play in those cases, whereas operators-turned-GPs often have a narrow aperture because they’ve spent most of their career at one or two companies. On the one hand, the operator-GP obviously has a lot of empathy for founders because they’ve been that founder, but they probably haven’t experienced all of the difficult issues that come up as companies scale across lots of different environments. Career VCs have.” — Sam Huleatt

“The best investors have an air of inevitability. It’s not asking for permission or doing something because it’s perceived to be high status.” — Sam Huleatt

“Lower barriers to entry doesn’t mean higher probabilities of success.” — Sam Huleatt

“Most people, after starting a fund, should assume that 60% of that Fund I—you should raise that from first-degree connections—people you already know. It may not be easy, but if you don’t have a network that’s large enough or has those resources, you either need to reconsider your fund target size or maybe you need to spend more time building your network before you start to go out and do that raise.” — Sam Huleatt

“If you don’t have an edge going into [a GP] accelerator, you’re certainly not going to find an edge in the accelerator.” — Sam Huleatt

“Why do the best GPs in the world want you to be on the cap table? A lot of people forget that a key aspect of venture is not just picking, but being picked. That’s true for LPs and it’s true for GPs.” — Sam Huleatt

If you somehow made it to the bottom of these show notes, I’m also trying a new experiment where I write my reactions to the episode on my second blog, Superclusters After Hours. For Sam’s episode, you can find my reactions here.

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.

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“I Write-Off Every Sourcing Slide” | Alex Felman | Superclusters | S7E2

alex felman

“The game you play as you’re building a reputation becomes a different game than when you have a reputation. And I tend to find, from an LP’s perspective, when you’re building reputation, that’s actually when you deliver the most value.” — Alex Felman

Alex Felman is an entrepreneurial and family office professional. For over 10 years, as a second-generation member, he has run his own family office, Felman Family Office, and works with family offices around the world through his family’s multifamily group, MSF Capital Advisors. Using his expertise in Molecular Toxicology and Bio-entrepreneurship (B.A from University of California -Berkeley, MBA from Copenhagen Business School), he advises them in biotechnology, healthcare, and other futuristic tech industries with the goal of maintaining long-term wealth through innovation. He regularly speaks at family office and private wealth events on topics such as tech investment, manager selection, generation and succession issues, rising generation trends, and more.

He has used his experience within the family office industry and 20 year background as an educator to create Exponential U, a family office education program designed to help families become multigenerationally sustainable. His proprietary L3 framework (Learn, Leverage, Legacy) allows the holistic development of family members to ensure a smooth leadership transition.

You can find Alex on his socials here:
LinkedIn: https://www.linkedin.com/in/alexwfelman/

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

OUTLINE:

[00:00] Intro
[04:36] The ‘tastemaker’ for family offices
[05:54] Exploration vs discipline
[08:15] The hero’s journey in investing
[09:49] The life line
[13:39] Building and having reputation
[16:06] Risk appetites for asset owners & allocators
[18:44] Why won’t an institution invest in me?
[19:50] The quiet thing LPs don’t talk about
[25:15] When did Alex get involved with his family office?
[29:09] Writing off sourcing slides
[35:33] Different flavors of “sourcing from YC”
[38:41] Emerging GPs are “investments-as-a-service”
[40:08] Fund power law is greater than startups’
[43:44] Emotional value of investing in funds
[44:45] Most VC funds are scams!
[50:01] Optimistic cynic
[51:43] Reminders today about the good ol’ days
[54:17] Late stage capitalism
[59:10] Post-credit scene: Dave Chappelle and podcasts

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“Every great conversation dances on the line of your understanding. You dance between both sides of the line and try to find out where what you know and what they know intersect and end. Good conversation is like play.” — Alex Felman

“With my background from the family offices, I almost believe that most family offices moving forward will need their own personal tastemaker or sommelier. Someone who’s curating the world specifically for the needs of that family.” — Alex Felman

“People get into trouble when they’re using the wrong tool or trying to do something for a different purpose. For example, I’m going to try to do discovery when I’m in my routine. Ok, you’re probably running into problems. Or routinizing my discovery. Those two things are in conflict with each other.” — Alex Felman

“One of the things people always forget—… What they remember from the hero’s journey is adventure, and we fight the dragon, and we get the treasure. But at the end of the hero’s journey, you’re supposed to bring that back to your community. And you’re supposed to forward it to your community. And you’re supposed to make your community better from the dragons and the treasure that you fight or find. Most people often leave off that last part. And I actually think that last part is extremely important.” — Alex Felman

“The game you play as you’re building a reputation becomes a different game than when you have a reputation. And I tend to find, from an LP’s perspective, when you’re building reputation, that’s actually when you deliver the most value.” — Alex Felman

“If you have a family office where you’ve actually outsourced it, your employee is more of an allocator than an owner. And in that case, that allocator is often making decisions to save their own job. Or to ensure that they continue to have a job.” — Alex Felman

“What I find is slightly sad is that ultimately because of security and comfort reasons, things like people’s pensions which should be more secure, are actually, in my opinion, taking riskier bets. And bets that will lead to worse outcomes.” — Alex Felman

“I believe that the amount of due diligence you do doesn’t matter depending on the deal size. So let’s say they’re writing five $100 million checks compared to 100 $5 million checks, that is literally 20 times the amount of work. So even if they’ll get a better return on that 100 $5 [million checks], on a realistic level, it forces them to play certain types of games.” — Alex Felman

“With at least funds on a standard two and twenty, somewhere around $75-100 million fund size is where the incentives shift from being carry-oriented to management-fee oriented. Once you get larger than that, then it actually becomes more incentivized for the fund managers to build up their funds than the actual returns itself.” — Alex Felman

“I would argue that power laws apply even more to funds than to startups.” — Alex Felman

“The intersection of venture as a product or service meets venture as a job career. And there are a lot of fund managers who see venture as a job career and essentially want to use it as a way to get a paycheck. And because of that, they’re going to put out a fairly boilerplate fund.” — Alex Felman

“Many venture funds are basically scams. I believe it’s a scam if you knowingly sell something you know you can’t deliver on. And the dirty secret in venture is if you purely look at venture from a financial point of view, most fund managers know they cannot hit their targets and yet they still sell that promise anyway. And I think that starts to become kind of scammy.” — Alex Felman

If you somehow made it to the bottom of these show notes, I’m also trying a new experiment where I write my reactions to the episode on my second blog, Superclusters After Hours. For Alex’s episode, you can find my reactions here.

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.

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“Venture is a Who Business, Not a What Business” | JD Montgomery | Superclusters | S7E1

jd montgomery

“One thing that is unique to private equity and venture capital is persistence is a little easier because of the brand. ‘They did good deals, so therefore, the good deals come to find you.’ If you were in a long-only private equity shop or hedge fund, Amazon is not going to come find you because you invested in Shopify.” — JD Montgomery

JD Montgomery leads the Family Office division at Canterbury Consulting and is a seasoned advisor with nearly four decades of experience serving prominent families with a focus on strategy, organization and measurement. Based in Newport Beach, he serves a select group of multi-generational families and helps them navigate the complexities of wealth, purpose, and legacy. Mr. Montgomery partners with his clients to help them optimize the allocation of their resources across generations. Over the years, Mr. Montgomery has developed a deep network of relationships in the venture capital industry. He has helped his clients gain meaningful exposure to venture funds and direct investments and develop relationships with leading innovators and investors globally. He is a Managing Director, shareholder, and board member at Canterbury Consulting. He graduated from Stanford University and holds the Chartered Alternative Investment Analyst (CAIA) designation.

You can find JD on his socials here:

LinkedIn: ⁠https://www.linkedin.com/in/jd-montgomery-6161341b/⁠

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

OUTLINE:

[00:00] Intro
[02:18] The “some day” exercise
[11:12] Why does JD do “some day” every 6 months?
[12:33] JD’s life line
[16:44] When JD is 85 years old…
[18:05] JD’s relationship with fatherhood despite the trauma
[22:40] Annual dad report cards
[25:33] Intentionality with GPs
[28:41] How to avoid one-hit wonders
[33:43] How to transfer self-esteem
[36:05] How do you get GPs off of their talk track?
[37:36] Non-obvious things JD looks for in GPs
[41:43] Is selling 0.2X DPI in the first 4 years meaningful?
[44:27] Should you recycle capital or deploy out of the next fund?
[46:34] Why did JD choose to work with families?
[48:07] “Never eat alone”
[51:34] How does JD think about time allocation?
[55:06] How many new GPs does JD meet with?
[59:07] How did JD pass on then back Founders Fund?
[1:03:22] The difference between unexplored gold veins and rotting trash
[1:08:13] Mayan Mocha at Austin’s Picnik
[1:08:58] JD’s secret street taco recipe
[1:11:09] JD’s reminder that we’re still in the good ol’ days
[1:13:20] Post-credit scene: No garlic and onions

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SELECT QUOTES FROM THIS EPISODE:

“I don’t have a mentor per se. My mentor is hundreds, probably thousands of people—I’m sure thousands—people that I’ve met where I try to learn just the amazing talent that person has and I smush it with the next person that I meet that might be most kind person that I meet or the most organized. So it’s this blend of a lot of people that really becomes the mentor.” — JD Montgomery

“DOD – dear old dad.” — JD Montgomery

“Kids grow up like trees and saplings. And a sapling needs a guiding post to hold them up when it’s windy.” — JD Montgomery

“One of the other questions I will ask is: ‘Tell me about the hardest thing you’ve ever done in your life.” — JD Montgomery

“To whom much is given, much is expected.” — JD Montgomery

“In estate planning, you can transfer money, but you can’t transfer self-esteem. Self-esteem is gained by going through the school of hard knocks and doing things and relying on yourself.” — JD Montgomery

“One thing that is unique to private equity and venture capital is persistence is a little easier because of the brand. ‘They did good deals, so therefore, the good deals come to find you.’ If you were in a long-only private equity shop or hedge fund, Amazon is not going to come find you because you invested in Shopify.” — JD Montgomery

“If they’re passionate about something—if they want to leave the world just a little different—their ding in the universe—and they want to give back, money doesn’t ruin them.” — JD Montgomery quoting a North Carolina professor

“I am not in a ‘what’ business; I’m in a ‘who’ business.” — JD Montgomery

“Gross IRR; gross performance. I don’t care. I care about net. It’s okay to show gross and then net. I prefer net. But if you show gross only, it’s just gross.” — JD Montgomery

If you somehow made it to the bottom of these show notes, I’m also trying a new experiment where I write my reactions to the episode on my second blog, Superclusters After Hours. For JD’s episode, you can find my reactions here.

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.

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Peter Walker as You’ve Never Seen Him Before | Peter Walker | Superclusters | S6PSE3

peter walker

“You’re making decisions in an incomplete vacuum. What I think many people should do more of, in terms of those mental models, is frame it in the reverse. Which of these decisions am I going to make that is the most regret-minimizing? That I have the least likelihood of regretting later on in life, assuming that in most cases, I will be wrong.” — Peter Walker

The holiday season has always been a great time to celebrate the movers and shakers in our world. This season we’re celebrating my personal favorites in the VC and startup world. This episode, it’s with my man, Peter Walker, who creates some of the industry’s most talked charts and graphics around the ebbs and flows of tech innovation.

Peter Walker runs the Insights team at Carta, where he works to make startups a little less opaque for founders, investors, and employees. Prior to Carta, he was a marketing executive for the media analytics startup PublicRelay and led a data visualization team at The Atlantic magazine. He lives in San Francisco, but you can find him on LinkedIn (see links below).

You can find Peter on his socials here:
LinkedIn: https://www.linkedin.com/in/peterjameswalker/
X / Twitter: https://x.com/PeterJ_Walker

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

OUTLINE:

[00:00] Intro
[02:52] Peter’s first brush with entrepreneurship
[11:49] 996 work culture
[17:11] Peter’s disclaimer on his data
[21:27] Regret-minimization when investing
[24:24] One example of regret-minimization
[26:07] How does Peter choose which conferences to go to?
[29:33] Conference panels are often bad
[36:22] The incongruencies of what GPs say publicly and privately
[41:43] Peter’s first data visualization
[44:18] Why is soccer underrated in the US?
[46:10] What great lengths has Peter gone for his friends?
[48:21] One worrisome trend we’re going to see in 2026
[52:18] One optimistic trend to look forward to in 2026

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SELECT QUOTES FROM THIS EPISODE:

“No one has to force you to work long hours if you really want to. The founders and early employees who push hardest aren’t usually doing it because someone set the office lights to stay on until midnight. They’re doing it because they care. It’s not obedience—it’s compulsion.” — Cristina Cordova

“There’s a growing recognition that that sense of compulsion, it very rarely lasts for 10 years. […] It’s very rare to find that one thing—that one set of problems—that can get you so excited for your entire life.” — Peter Walker

“Curiosity is the art of asking questions where you’re not married to the answer.” — Matt Huang

“You should probably, if you’re a founder, for instance, selectively ignore at least half of what I’m saying because it doesn’t apply to you. And your job as a founder, your job as an investor, your job as a thoughtful person is to figure out which half.” — Peter Walker

“If you torture the data long enough, it will confess to anything.”  — Ronald Coase

“You’re making decisions in an incomplete vacuum. What I think many people should do more of, in terms of those mental models, is frame it in the reverse. Which of these decisions am I going to make that is the most regret-minimizing? That I have the least likelihood of regretting later on in life, assuming that in most cases, I will be wrong.” — Peter Walker

“The worrisome part is that sometimes [selling founder secondaries] is at pretty early-stage companies—seed, A. Sometimes, it’s for $10,000 and I don’t know what happened there. Sometimes, it’s for a really sizable amount of money—seven figures. To me, that is a bubble sign. That is as close as you can get to capital is chasing consensus too much, and therefore, smart founders are just taking advantage and taking stuff off the table.” — Peter Walker

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.

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The Most Disappointing Podcast You’ll Ever Listen To (ft. Allie Garfinkle) | Superclusters | S6PSE2

allie garfinkle, david zhou, superclusters

Warning: This is a brief-ish, but hopefully entertaining intermission from the usual Superclusters programming. When we passed the 50th episode mark more than a few episodes ago, Tyler (my editor) and I thought it’d be interesting to record an episode where I change seats. Instead of me asking the questions, someone else would ask me questions. And I couldn’t imagine any better person to do so than my good friend, Allie, who in my humble opinion, is one of the best interviewers alive today.

Allie Garfinkle is a senior finance reporter for Fortune, covering venture capital and startups. She authors Fortune’s weekday dealmaking newsletter Term Sheet, hosts the Term Sheet Podcast, and co-chairs Fortune Brainstorm, a community and event series featuring an annual retreat in Deer Valley, Utah. A regular contributor to BBC’s Business Matters podcast, Allie is also a frequent moderator at major conferences such as SXSW. Before joining Fortune, she covered Amazon and Meta at Yahoo Finance and helped produce Emmy-nominated PBS Frontline business documentaries, including Elon Musk’s Twitter Takeover and The Power of the Fed. A graduate of The University of Chicago and New York University, Allie currently resides in Los Angeles.

You can find Allie on her socials here:
LinkedIn: https://www.linkedin.com/in/alexandra-garfinkle1/
X / Twitter: https://x.com/agarfinks

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

OUTLINE:

[00:00] Intro
[02:01] Art
[09:39] Competition
[17:49] Paleontology
[18:14] Allie’s Tiki mugs
[22:49] How has VC evolved?
[29:41] Evaluating risk
[43:04] Why is it important for VCs to stay in touch?
[47:10] Are there reliably good investors?
[53:09] Young GPs in market
[54:58] How useful is education that come via public talks?
[57:50] Does your niche fund size make sense for the market?
[1:01:16] Is there too much venture capital?
[01:05:24] How much of VC is art vs science?
[1:07:18] What’s going on in Allie’s world?
[1:09:45] Post-credit scene: Receipts

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

I’m intentionally keeping this section void of the things that I said since I hate the idea of quoting myself.

“Part of the point of this [investing job] is that you want to be anonymously, asymmetrically correct. And you can’t necessarily be that by saying or doing the same thing as everyone else. That being said, the worst nightmare for a VC is that no one wants to back a company they’ve backed.” — Allie Garfinkle

“If it eventually doesn’t become consensus, you were wrong.” — Allie Garfinkle

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.

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Timeless VS Just-In-Time Lessons | Earnest Sweat & Alexa Binns | Superclusters | S6PSE1

earnest sweat, alexa binns

The holiday season has always been a great time to celebrate the movers and shakers in our world. This season we’re celebrating my personal favorites in the LP world. To start this mini-holiday series off, Earnest Sweat and Alexa Binns runs one of the most popular podcasts on venture capital limited partners, Swimming with Allocators. I was also fortunate enough to be on their podcast as well as a bonus crossover episode.

You can find Earnest on his socials here:
LinkedIn: https://www.linkedin.com/in/earnestsweat/
X / Twitter: https://x.com/EarnestSweat

You can find Alexa on her socials here:
LinkedIn: https://www.linkedin.com/in/alexabinns/
X / Twitter: https://x.com/alexabinns

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

OUTLINE:

[00:00] Intro
[02:09] Alexa’s earliest relationship with money
[03:28] Earnest’s earliest relationship with money
[04:45] Earnest’s first major purchase
[06:41] Alexa’s first major purchase
[08:25] The difference between public speaking and interviewing
[12:19] Memorable guests on the SwA podcast
[14:46] To do or not to do in-person interviews
[18:05] Evolution of YouTube titles
[20:04] Why err towards evergreen content?
[22:30] Was SwA designed for LPs or GPs?
[24:12] How did Earnest and Alexa meet?
[24:56] How did Swimming with Allocators start?
[27:21] The Pandora’s Box of intros
[28:02] Alexa’s 3 buckets for LP investing
[30:12] What is ‘coming soon’ for Earnest and Alexa?
[36:58] Post-credit scene: Spider-Man & Investors as Avengers

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SELECT QUOTES FROM THIS EPISODE:

“Having done my investment philosophy, I’ve got three buckets. There is the ‘Let it ride, you can’t beat the market’ bucket. That’s the majority of what I’m working with. That’s 90[%] plus. There is a bucket where I’ve worked as a VC, I’ve managed a bunch of LP investments, I am better suited to vet deals than the average person. I believe in my ability to pick winners in this very thin layer of finance. Just in angel investing and GP selection where I’ve got lived experience and then my network. And then there’s a bucket for other ways capital can make your life richer.” — Alexa Binns

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.

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