I walked into this recording thinking measurement was the hard problem in impact. I walked out thinking the hard problem is where you put it.

Alexa asked Thomas Knowles the direct version. How do the Gratitude families square what they do with the formal ESG universe, and are we putting too many limitations on getting good done. He didn’t throw out the rigor and he didn’t defend it either. He moved it. “It’s much more about aligning on the philosophical approach, the ethos of the business, what their why.” Then the line I wrote down: “they’re going to go off and run their business. They’re going to decide who to invest in and how to operate on a day to day, and the metrics are going to be in the rear view.”

That landed for me because it is mechanical. A baseball scout doesn’t draft off last season’s slash line. Last season was a different league against different arms. He drafts off the tools, and the line shows up later as confirmation. Thomas underwrites a founder or a manager the same way. By the time an impact KPI exists, every decision that produced it was made by a person you already chose. The metric is a receipt. You buy the operator.

So where does the scorecard go? Gratitude is a community of 150 family offices, and the obvious number for a business like that is how many. He refuses it. “We’ve never had a KPI on like number growth, right? It’s always been you know who’s the right people we want in the community.” The one he holds hard sits on the members, not the portfolio. “The one that’s critical today is the action orientation. Like we do not want to be a community of people that just sit around and talk about these ideas.” Did you move capital or did you come to talk. That is the whole test, and it is the only number in the building.

That same filter pays for his no. Alexa asked what he’s advising people against, and he named nature based solutions and natural capital, called them incredibly important, then said the quiet part: “the ecosystem around the investment opportunities is still emerging and pretty nascent.” No risk return profile to underwrite yet, so he takes the interest and redirects it into something that can be priced. Most platforms built on member demand can’t tell members no. He built the one filter that lets him.

Where I’m less sure. Underwrite ethos instead of metrics and I don’t know what keeps it from collapsing into taste. Thomas has an answer for his own shop. The co-founders led with their own capital, and the action filter does real screening work. I don’t think it generalizes to a platform without those two things, and I didn’t push on it in the room.

Then the thing the episode is named for. Donor advised funds. Over 100 billion, Thomas figures maybe double that now, no mandatory annual distribution the way a foundation has, mostly parked in money markets and passive ETFs at Fidelity and Vanguard and Schwab. Philanthropic capital, already given away for the tax benefit, clipping coupons for large asset managers. His last word on it: “But it has not happened yet.” Biggest pool, no pipe.

Last month in Assigned But Not Read, after talking with Roy Swan, I argued that calling something non-financial is a labeling decision rather than an economic finding. Reclassify it, then price it right. Thomas is working the same problem from the other side. He isn’t dragging the impact number into the financial column at underwriting. He’s buying the person who will generate it and watching the one behavior he can see. I don’t know which is right. At pre-seed, where I spend most of my time and where the founder is the culture, I suspect his version is the only one that works.

Full episode here: https://swimmingwithallocators.com/podcast/the-biggest-untapped-impact-money-pool-youve-never-heard-of/

With gratitude,
earn

Craig was describing a founder who had just taken Intuit’s money and wanted to be put in front of an Intuit executive the following week. He didn’t soften it. “I guarantee you, you’re not ready. You might think you are, but I’m telling you, you’re not.” Then he said he’d rather wait six months.

I asked that question for selfish reasons. I started my venture career in corporate venture, and the half nobody warns you about is the internal half. Getting trusted by the people who build the product is harder than getting a founder to take a meeting. The episode is named after Shane Goudey’s warning about dumb money. Craig spent the rest of the hour describing what the opposite looks like from inside a corporate, and almost none of it is the check.

Three things I took from the conversation.

First, the fund commitment is how a small team sees what it can’t cover. Craig said virtually every corporate venture fund he knows is resource constrained, and his example was agentic commerce. Too early for them to invest in directly, no clear line from a seed company to an Intuit product, but clearly coming. So they went to the GPs they back as an LP and asked what they were seeing, what had been too early even for them, and which founders were worth an introduction. That became a session for an Intuit leadership team on a market they are not going to write a direct check into this year. He said it surprises him that more corporate programs don’t run that play. He’s right that it’s underused.

Second, the governance detail decides everything. Plenty of corporate programs require a business-unit sponsor on every deal. Craig’s view is that you take an already narrow opportunity set and make it narrower, and then you lose on the clock, because a Series A or a fund close won’t wait for internal consensus. His version is to agree with leadership on the big bets up front and then invest inside those lines without per-deal buy-in. He calls it freedom within fences. Same logic on diligence. He can tap an expert network of 10,000 plus Intuit associates and ask what they’d do with a company, how they’d integrate it, what they’d pay for it. His line was that it’s an amazing leg up as an expert network, and that he needs it to stay one rather than a mechanism with approval rights over an investment. That distinction is the whole program.

Third, one champion is not a coalition. Founders lose their internal advocate constantly. The person who believed in you takes a great new role in a business unit that has nothing to do with what you’re building, and you’re back to zero. Craig’s read is that finding the first champion means the work started, not that it’s done, and that you build a coalition past that person. I’ve watched that exact failure kill real partnerships and I’d filed it under bad luck. He plans for it.

I asked how he handles the tension of translating in both directions, including how he figures out what’s true when the startup and the business unit each tell him a different version. He gave me the mechanics, which were good, and not the test. I don’t think there is one you can hand someone. It’s reps.

The other open thing is a disagreement this episode doesn’t settle. Craig says GPs who treat corporates as undesirable hold a very outdated view, and he’s right that the investor class has professionalized. Shane, in the same hour, tells managers to be purposeful about whose capital they onboard, because the high net worth money that fills a fund once rarely comes back fund after fund. Both of them are asking the same question from opposite ends of the wire. Nobody on the recording, me included, said how a first-time manager should weigh it.

Alexa brought up Roy Swan from episode 109 on this one, and his point that mission-focused investing is twice as hard because you’re carrying strategic and financial goals at the same time. She said corporate venture is the same shape. I wrote about Roy a few weeks back and missed that overlap at the time. Two mandates, one check. Craig’s whole north star answer is about writing the second mandate down before you need it.

If you’re pitching a corporate LP, his ask is small and most people skip it. Read their last couple of quarterly releases and their investor day before the meeting, and bring a different deck than the one you showed three family offices this week. And if you’re building vertical-specific wealth management, financial planning that knows a teacher’s income is not an engineer’s, he said he’d love to talk to you.

Listen: https://swimmingwithallocators.com/podcast/stop-taking-dumb-money

With gratitude,
Earn

Alexa asked it straight. Fees on fees feel out of control right now, especially with the top ten names, so what are you doing about the feeding frenzy, and do you need access to those hot names.

I expected Dan Fordyce to answer the access question. He answered a different one.

What came back was a set of numbers. Two new names a year in venture. Two in growth equity. Two in buyout. Roughly equal weight across the three. A ballpark check size. A small, defined slice for directs. Then this: “that also forces us to keep the bar exceptionally high.”

I went in thinking the scarce thing in private markets is access. I came out thinking access got cheap, restraint got expensive, and restraint does not survive a hot market unless somebody writes it down as a number first.

Three things I took from this episode that might interest you:

The first is that the cap is the strategy, not a constraint on it. Dan looks at eight or nine hundred things a year and gets to twenty or thirty he would genuinely want. Six get committed. The gap between thirty good options and six slots is not something he apologized for. It is the mechanism. He traced it to 2021 and 2022. “The number one thing to be a good private equity allocator is don’t miss a vintage year.” Be consistent, and do not overallocate into the years that look hot.

That is a pitch count. A coach does not pull a starter in the seventh because the guy looks tired. He pulls him at a number set before anybody threw a warmup pitch, because in the seventh with the crowd standing, nobody’s read on a tired arm is worth much, his own included. Two a year is the same instrument. Not taste. A number that exists to overrule taste at the moment taste stops working.

The second thing cut against what I assumed. I had the direct co-investments filed as the alpha line. Summation writes alongside its GPs in a handful of deals a year, so I read that as picking. Dan took it apart. “We’re not asset pickers.” The directs are there, in his words, “really at good economics to offset our fee load.” If a manager puts money into a company, they sanity check the thesis and write a small check at better economics than the fund itself pays. The purpose of the line item is the fee math. The valuation call stays with the GP. I have heard a lot of allocators describe co-invest. I had not heard one call it a cost instrument.

The third confirmed something instead of teaching it to me, and I would rather say that than dress it up. I asked Dan why the way people treat others, when there is nothing in it for them, matters more now than it used to. I asked because he has said it to me before. His answer was the one I expected: as knowledge and information get democratized and the other barriers fall, what stays durable is relationships and reputation. What moved was where it sits. I had it as the soft layer on top of the model. I think now it is the only input that never gets commoditized, which makes it the last thing you can actually underwrite. Then he described a family office friend who toured the late stage crossover funds and found “something like the same 10 names were in every single portfolio in different weights.” If ten names are the industry’s portfolio, the portfolio is not the differentiator.

Time will tell if this actually works. Summation is about three years in. Dan, who calls himself a “very wise 31 year old,” says this frenzy reminds him of 2021 and 2022, only broader, with more real businesses underneath it. But a pitch count is easy to hold in the fourth inning. The test comes the first time a name they passed on triples in public with an LP on the phone. I am also chewing on the structure. They chose open ended on purpose, to sit as close to an endowment as they could, and Dan was careful that this is not an evergreen or an interval fund. I did not push on where the redemption mechanics land, and I should have, because an endowment has nobody who can ask for the money back and that is doing a lot of work in the comparison.

Shane Goudey, in the Sidley segment, put a price on the access everybody is chasing. Companies have started extending drag, tag and co-sale rights through an SPV down to the underlying LPs inside it. The first time that happened, he said, it “just sort of blew people’s minds.” Now, “if you want the access, these are the kinds of things you may have to agree to.” That is the other half of Dan’s point. The hot name is available. The terms are what nobody priced.

Last week on Carry On, Santosh and I spent an episode on what still counts as venture. This is the LP side of the same argument. Both land in the same place: the industry has gotten very good at manufacturing access and no better at saying no.

Listen here: https://swimmingwithallocators.com/podcast/lp-destroys-fees-on-fees/

With gratitude,
earn

Santosh was describing what happens when a mega fund shows up, hoovers up most of a round, and prices it somewhere that makes you wince. I cut in. Twelve years in this business and I’ve never made an investment where the price felt comfortable. Either it looked a little pricey, or it looked cheap for a reason and the reason was a lot of “hair” and risk I was signing up to carry. What I said on the tape: “Anything that felt like, I’m getting a great deal on, it was just okay.”

I didn’t learn that in the recording but what the hour did was show me why it holds. If the price never feels right, then price discipline isn’t the discipline, and the mega fund conversation almost never gets around to naming what is.

We opened on the question we both get on every podcast we do. Mega funds: is that real venture? It’s become a purity test, and I said so in the first two minutes. The useful question is how you succeed in an industry that’s always going to have a bigger player in the room.

Santosh brought the history and it’s worse than I remembered. Funds of $500 million and up were already taking 44% of all venture raised in 2018, before anybody had a billion dollar vehicle. By his count 90% now goes to categorically established firms.

The part I keep chewing on is pacing. When I got into this, the craft had a rhythm I compared to musicians in the 1960s and 1970s. No album for three or four years, because some life has to happen in between that you can be inspired by and then actually execute on. That went away. Firms went from $500 million to a billion to two billion and deployed it in about a year, and they were having new funds pop up more than Lil Wayne had mixtapes in the early 2000s.

The mechanics under that are the real story. More AUM means more layers. More GPs, more junior partners, more principals, more VPs. Then you have to pay all those people against something you can measure, and what you pay them for is deployment. I said it plainly on the tape: your performance is determined by how much capital you deploy, not companies you see, not great deals you do. Santosh calls it velocity of capital. It isn’t a style choice, it’s a comp plan, and a correction doesn’t fix a comp plan.

Which brings me back to what the discipline actually is. I tell our team to underwrite for our own interest when a new price shows up, not for the whole cap table. That’s supposed to require conviction about a number. I also just said no number ever felt right. The way I hold both is that the conviction is about the company and the window, not the entry. I’m not fully settled there, and I said as much on air.

The best idea in the hour is Santosh’s, not mine. It’s about something mega funds structurally cannot do and smaller firms can, and it’s the one place in this whole conversation where the asymmetry runs our way. I’d rather you hear him lay it out than read my compression of it. It starts around the 32 minute mark.

I wrote in Blue Cars about liquidity not coming back the way people assume it will. This is the operator version of the same problem.

Also in this one, Javad Mostofizadeh of WilmerHale on what fund formation actually involves, start to finish. Worth your time if you’re standing up a first fund.

Listen here: https://carryonpodcast.com/podcast/thats-not-venture/

with gratitude,
Earn Sweat

SpaceX priced at $135 on June 11, started trading the 12th, raised about $75 billion, closed its first day at $2.1 trillion. Largest IPO ever. And LPs still aren’t writing checks.

GPs read that as LPs being slow. It isn’t slowness. LPs aren’t re-upping on a headline. They’re not going to re-up until there’s a wire.

Alexa reminded me of something a future guest, Trish at Babson, told us: When that capital flows back in, it flows back into the full pot. It isn’t an LP’s to redeploy. And we were in the red as an asset class, so venture doesn’t walk into that room with a credit. It walks in with ten or fifteen years to explain.

That’s the part we skip as GPs. We raised an enormous amount against very few liquidity events. It takes time for that to shake back out into the ecosystem. One listing doesn’t do it. Multiple might.

Three things to look out for in this DDQ conversation:

The exit that funds the middle of the book is being structured out of existence. Early stage GPs keep telling me the $300 to $500 million outcome has gotten rare enough to be its own kind of unicorn. Acquirers got smart. A carve out of fifteen or twenty or fifty million to the founders is cheaper than a purchase price for the company. So the top of the book got better this summer and the middle got worse. Different companies, different funds. One doesn’t pay for the other.

Nobody has a signal for future potential, including me. Alexa shared that Aaron at 50 South made the point that every GP shows up impressive on past success, and his job is finding the subset with real future potential. I don’t think this market is digging into what that actually looks like. My best answer is the founder magnet, and it works like the blue car thing. Somebody says blue car and then you see blue cars all day. Some people become a node in an ecosystem that fast, and I think the better allocators are going to start noticing who does. That’s a hunch about where they’ll look. It isn’t a signal yet.

Legible has become its own trap. Break your differentiation down far enough to be legible to an LP and it starts to sound like everything on every VC website. I said that on air and I haven’t solved it. The least bad move is the one Giada at SFERS gave Alexa: ask a friend why they invested in you, instead of reverse engineering what you think LPs want to hear.

Where I’m not settled. I took a victory lap on episode 82, where we called that LPs who went direct would drift back to fund of funds, but only the ones offering more than a basket. It’s happening. Foundations, endowments, family offices, now public pensions. Then the LP who told me that asked whether a fund of funds rush is itself a peak signal, since it was one in 2020 and 2021. I said maybe. That’s why you don’t time the market, and if it helps emerging managers, I’ll take it. Alexa’s read is cleaner than mine. She thinks it’s the barbell going consensus, that venture is multiple asset classes now, and the early stage sliver gets outsourced to people who do it for a living.

Listen to the full DDQ with Alexa here: https://swimmingwithallocators.com/podcast/why-lps-still-arent-buying-the-venture-comeback/

with gratitude,
Earn Sweat

Alexa brought up 996. Nine to nine, six days a week. Roy asked her what it meant, she explained it, and he said that was light work as far as he was concerned. I jumped in and said we were doing that on Wall Street, that's nothing. Two guys with banking in their past, agreeing on instinct.

Then Roy turned it himself. He said wealth gets measured in different ways. If you want to be wealthy in Elon Musk's image, that is typically what it takes. If you want to coach your daughter's soccer team, that is also wealth. He left an investment banking career when his oldest daughter reached a certain age. He said he has zero regrets.

I have heard plenty of people make the case for better jobs. Few of them admit they picked the grind themselves for years and knew exactly why. That is the register of the whole conversation. Roy is not asking our industry to feel differently. He is asking it to check its work.

I walked in already believing impact and returns are not opposed. What I lacked was a clean account of why that is still an argument. Roy's answer is that the obstacle was never the math.

Start with the number. Ford runs a $1 billion notional impact endowment, plus roughly $450 million of catalytic capital where impact is the primary purpose and financial return is secondary. Roy put their cost of capital at about nine and a half percent: a five percent legal spend rate they exceed, plus inflation. Miss it and they erode the corpus. He pointed out that hurdle is higher than many public pension funds and some sovereign wealth funds. So the portfolio most people file under concessionary is underwriting to a harder number than the portfolios people file under serious. That is worth sitting with before the next time someone says impact capital is patient.

Then the reading. Roy has a line about "a category of reading assignments that are in fact assigned but not read on the syllabus." He put Milton Friedman's famous essay in that category. He went back and read it, close to ten times, because he could not believe what was on the page. His read is that it is a stakeholder capitalism essay: businesses should follow the rules and invest in workers and communities for the purpose of increasing enterprise value. He added that Friedman also wanted a basic income for everyone. I am not going to referee that interpretation in a podcast recap. What I took was the method. He went and read it.

The part I actually wanted was the mechanic. I asked him what asset managers and venture capitalists specifically can do with any of this. He said the fastest thing you can do at any moment is also the hardest, which is to question conventional wisdom, then he made it concrete. He pulled the term "non-financial factors" out of fiduciary legal vocabulary. Empathy and culture sit in that bucket. Attrition is the easiest thing in the world to measure, and some sectors run two hundred percent annual attrition. Empathy and good culture reduce it, and the savings go straight to the bottom line. So "non-financial" turns out to be a labeling decision rather than an economic finding. His framing of the cost, in his own words: accepting things without questioning them means "you can lose out on alpha."

The psychology sits underneath all of it. Roy pointed at loss aversion, that when people are comfortable they will pay to stay comfortable and give up upside to do it. Narrow, affinity-based allocation, he said, may not be economically rational, but it is psychologically rational. Anyone raising a first fund from people who only write checks into what they already recognize should read that sentence twice.

Where I am still unsettled: I asked for what allocators do and I got a method, not a checklist. Attrition math is clean in a sector running two hundred percent turnover. It is not clean at a fourteen-person seed company where the founder is the culture and everyone is mid-vest. I do not know yet how to price that at pre-seed, and Roy was not claiming to. He also offered Anthropic as the example, saying Ford was offered the chance to invest in March 2024, that there were real questions then about whether the company would make it, and that the public interest focus which initially slowed its growth became a big asset. I believe the mechanism. I would still want to hear that argument made without the outcome already attached to it.

Earlier this year I wrote about the wrong kind of urgency, the kind you borrow from someone else's scoreboard. Roy opened this episode with urgency too, running the other direction. Ford has not taken outside money since 1947. The grants are the largest bill they pay. Purpose can create urgency, he said. That is the version I was reaching for and did not have a name for.

Listen to the full episode here: https://www.google.com/url?q=https://swimmingwithallocators.com/podcast/doing-good-is-not-the-trade-off/&source=gmail&ust=1790324065329000&sa=E

See you later allocator,
Earnest

I opened the recording by asking Santosh whether I was crazy for wanting to start a Series A fund. Half joke. He did not treat it as one.

He came back with a field report. He has spent months catching up with partners at household name firms, the kind you would have called a Sand Hill Road Series A fund. One told him his partnership is taking far more interest in growth and late stage. Santosh pushed on Series A. They had not done one in months. He asked what they were doing instead. The answer was seed. Not out of love for seed. Out of fund size. In Santosh’s relay of it: “we’re not getting ownership at these late stages, so we’re doing seed rounds of five to $10 million, and we get 15% ownership, 20% ownership.” Sitting on a billion or two, a firm can absorb those losses. So it buys the option instead.

That is the gap, described by the people who opened it.

I did not walk in undecided. I have been building toward that stage for a while, and I have read messy middle enough times to know what conventional wisdom says. What this conversation did was replace my instinct with mechanics.

Three things I took.

The labels stopped doing work, and that is the opening. Santosh put it plainly: “increasingly I find like the nomenclature of pre-seed seed A probably doesn’t matter as much.” His illustration is the cleanest version of the problem I have heard. You can raise a large seed. You can raise a small Series A. He does not know what to call the thing between them, and it lands between five and twenty million depending on what you are building. His conclusion is structural, not semantic. A franchise in the middle may need to write a five million dollar round and also something closer to a forty or fifty million dollar Series B, out of one pool.

The job is general manager, not card counter. You are not playing poker, running percentages against rigid rules. You are the general manager of the Pittsburgh Pirates or the Cowboys or the Knicks, assessing talent all the time. A free agent. A one and done phenom. A guy who spent six years in college with NIL money behind him. Each archetype carries its own diligence, and the portfolio follows from that instead of the other way around. One SKU does not work. Some of these are high priced luxury at the start and some are a fixer upper. Santosh added the discipline that keeps this from becoming drift: an opinion that is data informed, and a clear read on where you want to enter. In some situations he would rather come in at seed. In others there is enough risk that he will leave return on the table and wait for the B.

The mega funds may be building demand for the thing they displaced. This is the one I did not have. Santosh thinks the ascension of mega funds “might actually be priming the pump for this type of a strategy.” The mechanism is the good part. A billion dollar vehicle does not invest at one stage or one profile. The LP writing that check is already underwriting a blend, some late stage, some early growth, some seed and Series A, and does not get to price the pieces separately. So the muscle for a flexible single pool already exists in the LP base. It got built by the firms that made the gap.

Where I am not settled.

Scope creep. I have spent years telling LPs to ask whether prior success at one stage predicts anything at another, then spent this episode arguing for flexibility across three of them. I put that question back to the industry on air. Santosh answered with what is actually happening: “all the rules have been thrown out the window. If you see where LP dollars have been flowing.” That is a description of behavior, not a defense of it. I do not have the resolution.

Reversion, too. He asked me straight what the risk is that the market goes back to clean lines. I said I am not sure we ever return to rigid ones, but I expect more blurred ones. That is a hedge, and it should stay one.

The thing nagging at me came from the last Swimming with Allocators episode. Rachel Kloepfer read the same barbell from the LP chair on Swimming with Allocators and inverted it. Her view is that SaaS and consumer belong with a big fund, because distribution is the moat. We keep landing on this show at your why, and the deeper version is your worldview. Mine is that technology should make for a more connected society, and the practical form of that is being the person who finds a founder their customers. So her argument makes distribution the thing scale supplies, and mine makes it the thing I supply. I have not worked out which of us is describing my market.

The closing thing I said is the part I believe most. Building a firm right now is an essay test, not a standardized test. Standards are being broken every day. The answer sheet is not coming. We have to create it.

Listen here: https://carryonpodcast.com/podcast/mind-the-gap-who-actually-does-series-a-anymore/

With gratitude,
earn

I asked Rachel Kloepfer what she actually asks fund managers. Not the scripted portfolio construction question. The one that gets her an answer she would not otherwise get.

She started with what does not work. A manager says sourcing, then says events, then says a network from whatever large company they worked at. “That’s an obvious give,” she said. Then community building, which she flagged as a buzzword before I could. Then the question itself: “pull up your calendar and let’s talk about what you’ve done this week, last week, whatever.”

That request is good because it cannot be answered with a narrative. Everything above it can.

Rachel spent her first career in investigative and crime reporting before landing at Lenora Capital, the private investments arm of Brighton Jones. Most of what I took traces back to that.

Three things.

First, the edge is the records, not the questions. I expected the journalism answer to be about asking hard things of people who do not want to talk. She said that, and it is real. The sharper piece was procedural. She filed a lot of public records requests, and the skill that transferred was knowing how the request process blocks access to information that is already public by law. Mess up the form and you lose a month. Know it and you get in. She described knowing “who you needed to get on the phone and yell at” at day thirty. She now uses FOIA to pull endowment and pension investing strategies and watch how they shifted over time, since all of that has to be publicly filed. I have been around this seat for years and had not thought of that as an LP tool.

Second, my own analogy came back to me changed. I put the barbell to her as an NFL team against a tennis pro. The big firm has a brand that moves on its own. The emerging manager is one person walking into tournaments on their own merits (and own money, look up how a professional tennis player operates!!!). She took the framing, then put the advantage somewhere I did not expect.

The standard pitch runs the other way. The emerging manager claims the fast categories and the mega fund is the safe institutional choice. Rachel’s read: if you are underwriting SaaS or consumer, distribution is the moat, and in her personal opinion you want to be with a big fund. Where a smaller GP is genuinely strong is niche knowledge in a hard industry. She listed life sciences and bio, hardware, anything selling to the government, anything tied to blue collar logistics. In those, the knowledge is the moat.

Her reasoning is what makes it hold. Nobody can forecast this market, GPs included. “There is no all seeing eye that’s going to have the right answers.” So the riskier and faster the area, the more she wants it sitting with a firm that has enough manpower and brand power that “they can will their way through it.” That is not a quality judgment on the manager. It is a judgment about what survives being wrong.

Third, succession planning is a live reason she says no. Not a governance checkbox. She described firms she would have said yes to at first touch, among the best she can think of, that got a no on succession alone. The mechanism is specific. A GP who was senior at Google pulls founders out of that orbit because those founders respect the relationship. When the GP goes, the pull goes. The commitment does not. A ten year fund with extensions, re-upped to hold an allocation, means in her words “we’re looking at a 20 year relationship.” The line that stuck with me was about opening a deck years in and not recognizing a single name on it.

Where I am not settled is what that does to the media argument. Rachel thinks owned media decides the next decade. Streaming wars, entertainmentification of the whole economy, an A16Z documentary she would not be surprised to see. Eyes bring LPs, founders, talent, and deals at more disciplined prices. I co-host a podcast about LPs, so I did not need convincing. This conversation confirmed what I already believed rather than changing it, and I would rather say that than manufacture a turn.

But she also said the underinvestment in succession happens partly because so much focus goes to the media presence of the firm. Those two sit uneasily next to each other. The same build that wins attention now may be the one starving the bench that has to carry the brand in year fifteen. I did not push on it in the room. I do not know how she would resolve it.

Kelli Fontaine came at this from the other end on episode 105. Her team runs 78 dashboards and she is the most data-forward allocator we have had on. Rachel came in from crime reporting. They land in the same place. There is tactical benchmarking, Rachel said, and then there is the person to person work that sits “outside of what you can put on a spreadsheet,” and she called that second part a finger to the wind. Two unrelated careers, same conclusion about where the numbers stop.

The calendar question is what that conclusion looks like once it is operational. Not more data. One question a story cannot survive.

Listen here: https://swimmingwithallocators.com/podcast/what-lps-really-want-from-venture-funds/

With gratitude,
earn

I read a line off Henrik Reimavuo's own website and asked him to defend it. Firm Capital backs next-gen managers who operate at the esoteric edge. I wanted to know what that meant and how he underwrites it. He laughed. His colleagues had asked him the same thing when he wrote it, he said, and they kept the phrase because "we like the sound of it." Then he gave the real answer, which was better than the line.

The real answer is that he is not shopping for agreement. "Everybody talks about consensus," he said. He wants managers who can teach him something he cannot read from the outside. That is only a strategy if the market really does have parts nobody can read.

I brought Henrik the consensus framing on Europe, the one that comes up on this show constantly: the gap with the US is a capital shortage, so put more euros in. He does not buy it. He calls it a quality problem and a misallocation problem, and he puts the shortage at the wrong end of the pipe. By his numbers, angel capital in Europe runs roughly 20x below the US and pre-seed runs 10x to 13x below. The gap does not start at growth. It starts at the top of the funnel.

Then the mechanism. He puts governments at around 40 percent of the capital backing European venture funds. Government money carries government objectives: policy, employment, regional development. None of those is performance.

The detail that made it land was not a number. Henrik said managers who used to be sustainability investors are now investing in weapons. Same people, same funds. The narrative moved from decarbonization to European resilience and defense, and the money moved with it, because it was following the narrative and not the edge.

Three things I took.

First, the unmarked manager. Henrik sorts first-time GPs into archetypes, blunt about the cost of each. The spinout competes forever against the brand they left. The operator wears the tattoo of the company they built. The community catalyst has neither. He calls that being "unmarked." In soccer, unmarked is not a skill. It is a fact about where the defenders chose to stand. LP coverage is built to scout spinouts and operators, so the person who spent four years convening a group nobody scored as a market is standing free. The run only counts if somebody passes. That is the gap Henrik wants Firm inside: those managers usually get their day-one check from a US GP or from angels in their own network, and almost never from a European institution.

Second, the sequencing test. I pushed on community, because being a node in the ecosystem is not new and half this industry has a podcast now (this guy!!!). His filter is order of operations. Did the community come first and the fund arrive as a consequence, or was the community assembled to justify a raise? His examples were specific enough to check. One person built for the non-executive operator layer inside European startups, a layer with no room of its own while founders, juniors and investors all had theirs. Another convened post-Soviet founders across cities worldwide. Both are raising funds on top of networks they did not build in order to raise a fund.

Third, fragmentation as an asset. Henrik argues Europe's cultural fragmentation is "a feature, not a bug," that you can be the Swiss German investor to a Swiss German founder permanently and hold your seat because you understand each other. I believe that at entry. I have watched local relationships hold cap table position through rounds where nothing else would. I am less sure it survives scale, because the fragmentation that protects you at entry also caps how many companies you can serve. He would say that is why he writes into sub-$100M funds and keeps the portfolio concentrated. I want to see a vintage.

I asked Senia Rapisarda of HarbourVest a near-identical question about Canada in episode 103. She refused the capital answer too. She called ecosystem building agriculture rather than geology: a bigger drill does not find the nugget. What is unresolved for me is that Senia helped design VCAP, a government program, and credits it with catalyzing Canada, while Henrik points at state capital as the source of the misallocation. I cannot draw that line cleanly yet. My working guess is that the state is good at planting and bad at picking.

Where I did not move: I walked in believing "more capital" is almost never the real diagnosis for an ecosystem, and nothing here changed that. It sharpened it. The question is not how much capital. It is who the capital answers to.

He closed on something I did not expect. I asked what he wished more LPs would say out loud. Answer your emails, he said, and say no clearly, face to face, with the actual reason, which he says is usually a human issue rather than a portfolio one. He described himself as a notorious people pleaser who has worked through some of it. In a business that hides behind portfolio construction language, that is harder than it sounds.

Listen to the full conversation here:

With gratitude,
earn

I said something on the record I have mostly kept to private conversations. When I moved to San Francisco after business school and started interviewing for associate and principal VC roles, I was grateful that nobody could tell how old I was. My genes bought me cover. I needed it, because I heard over and over something I called the rule of 27. If you had not done something exceptional by 27, why would a top tier firm take you.

I do not think I was wrong that the rule existed. I was wrong about what it measures.

Santosh opened by asking whether there is a sweet spot age for a high functioning VC. I swapped the word almost immediately. Not age. Lifestyle. This work feels a lot like life. You meet people and nothing comes of it. You back people and it goes to hell or heaven. What the job asks for is room to think and the willingness to keep showing up, and both of those track with age without being caused by it.

Then he brought numbers that cut against the folklore. Across roughly three million U.S. founders the mean age is 42. Among the highest growth one in a thousand it is 45. Founders at 50 and over are twice as likely to deliver a top tier outcome. The industry that invented the rule of 27 writes its checks to people who are, on average, fifteen years past it.

An aging curve is a population object and we keep using it to price a person. Basketball solved this a while ago. The curve says a wing declines after 30. LeBron at 40 does not refute the curve. He is the residual, and the residual is the whole business. I said on air that the goal is to be an exception that invests in exceptions. You are trying to be the weird dot on the chart, the one that should not be there. If that is the job, a hiring band is a strange instrument to run it through.

Three things I took.

Risk tolerance may be inherited rather than aged into. Santosh gave the standard version. You will never be more risk seeking than right out of school, because responsibility becomes liability. I pushed on where that belief comes from. We were raised by boomers, personally and professionally, and that generation was handed a world that mostly went up and to the right. Some of what they taught us was true then and is not true now. I am not sure the risk curve is a fact about human beings. It may be a fact about one fifty year run.

Staying too long is a franchise cost before it is a personal one. Santosh is the youngest of four partners at Dynamo and the firm is coming up on eleven years. He looks at other professions carrying partners at 65 and 75 and 85 and sees damage. "It doesn't matter if your name's on the door," he said. "That's still net negative for you and your legacy if you're a founder of a firm." He raised Jordan going to the Wizards and was honest that ego sits underneath the whole question. LPs ask him how many funds he has left in him. It is a rude question and it is the right one, asked badly.

Experience might be the depreciating asset. I did not walk in with this one, and it went against me. NVCA data shows the share of partners at their current firm ten years or more has risen over the last four or five years. I offered the flattering read. Founders want expertise, pattern recognition compounds, the market is finally paying for people who have seen a few cycles. Santosh agreed that every firm benefits from someone who has seen multiple cycles, because history rhymes. Then he kept going. "Experience alone, I don't think, will be valuable because in the age of intelligence, you can tap into experience in a non-humanistic way that's still sufficient."

I have been sitting with it since. If experience is retrievable, the ten year tenure number stops being evidence of compounding and becomes a question about what those ten years still buy.

Where I am not settled. I still believe pattern recognition compounds. What I can no longer defend is the assumption that it compounds faster than it commoditizes. That is the same clock Santosh put on every other venture advantage on episode four, and I did not notice he had turned it on us.

I wrote in Everyone Shoots Threes Now that a weakness is a hiring problem and not a prompting problem. The other half of that showed up here. Knowing precisely what you spike at beats being adequate at three things. When you are young you try to spike at all of them and dilute the one you are actually good at.

There is no perfect age. There is a weird dot, and the work is getting yourself onto it.

Listen here.

with gratitude,
earn

I asked Michael Wooten a question I have been chewing on for months, and he answered a better one.

My question was about telling versus showing. I keep meeting emerging managers who are excellent at telling, and whose response to a hard fundraise is to tell more. I keep meeting others who are quieter, who have something real, and who cannot get it across a table. I wanted to know how a manager shows differentiation when it is not obvious, not early, and not loud.

Michael did not take the communication framing. “Sometimes people want you to be differentiated, but they want you to be on the edge of the box,” he said. “If you’re too differentiated, then that’s probably going to be tough for the investment committee.”

I had been treating differentiation as a storytelling problem. He handed it back to me as an underwriting problem.

In basketball (yes another basketball anology) the corner three is the best shot on the floor and the tightest one. Twenty two feet instead of twenty three point nine, worth the same three points. That foot and a half is the entire edge. It is also the spot where the sideline crowds your heels. The efficiency and the out of bounds line sit on the same piece of floor. You do not get one without standing next to the other.

That is the edge of the box. It is where the return lives and it is where a committee stops being able to price you.

Three things I took from the hour.

Differentiation has to be legible, not just real. Michael’s point was not that managers should sand down their edges. It was that an LP has to be able to write you up. Storytelling is necessary and it is not sufficient. He was direct that execution has to back it, and that at the earliest stage you are selling the sizzle because the steak does not exist yet. By growth you have the steak and you had better lead with it. The failure I see most often is not the manager who is too plain. It is the manager who is genuinely differentiated in a way that has no comparable, and who reads a committee’s inability to underwrite them as a lack of conviction.

Sourcing is the product, and the product is for founders. Michael walked through why SignalFire stood out to him. They built proprietary data early, used it internally for sourcing, then turned the same thing around and gave it to their founders. That second move is the one that mattered. It stopped being a sourcing edge and became a winning edge. He said they took him through the track record and showed where they beat tier one firms already on the cap table, and ended up with more ownership than they had rights to. Underneath it is a claim I now think is just true. Of capital, he said, “that’s not going to be enough because that’s a commodity.” Founders want three things from an investor, in his telling. Introductions to customers, capital, and help recruiting. Two of the three are not money.

The thesis push may be eating the thing it was meant to prove. This was his hot take and it is the part I am still turning over. He thinks sector theses work at growth and do not make sense early. “I think your thesis should be to find great founders who are trying to tackle hard problems.” Then he closed the loop. LPs want managers in a box. Managers reverse engineer a thesis to get into the box. “you’ve crowded out that market and now you’re no longer differentiated because everybody else is doing that.” The differentiation requirement manufactures sameness. That is a mechanism, not a complaint.

Where I am not settled. I let that one sit in the room without pushing on it. I have watched sector focus do real work at pre seed, but the work it does is access, not picking. A narrow lane gets you into founder networks a generalist never sees. Michael would probably say fine, that is a sourcing edge, call it what it is and stop calling it a thesis. He may be right. I have not landed.

One more thing worth saying plainly. When I asked what he actually watches in diligence, none of it was the deck. He watches how a manager treats waitstaff. He hands them a question thirty minutes early, teach me something, anything, and then watches whether they can carry a conversation while it sits in the back of their head. He built that from hiring people at a former job and thinks manager selection is not that different. And his pet peeve was not a bad quarter. It was silence. The manager who stops responding after the money is in.

I wrote in The Songwriting Credit that sourcing is the part of this business people credit last and depend on most. Michael got there from the other side of the table and landed in the same place. That is usually a sign the thing is true.

Listen to the full conversation with Michael Wooten here.

With gratitude,
earn

Two years ago I spent a lot of money on Replit trying to build a Cerebro, an agentic CRM that would let me blow past Dunbar’s number. My family asked what I was doing. The best answer I had was that it was cool. Vibe coding, just vibes.

I started that story on episode four of Carry On, and Santosh cut in with the specifics before I got to them. Five hundred plus. Over a weekend. I finished his sentence. That you’re not even using. Everybody building has one of those.

I brought the pattern; Santosh supplied the part I did not have. My list was firms that focused on data, firms that built platform services, firms that specialized in one industry. Each started as a reason an LP should pick you and ended as a line in every deck. What I asked was what happens to whoever shows up late.

He answered with a clock. In the prior cycles, novelty commoditized in roughly one to two fund cycles. He claims that AI accelerates that, because commoditizing defensibility is what AI does to the industries it enters. Then he ran it forward. We are sitting here in 2026; three years ago was 2023, and by his read the cycle has arguably run once already. He kept the hedge and so will I. On adoption, he is not hedging. “You cannot do it.”

I reached for basketball. When the Sloan people let us idiots know that a thirty-five percent three-point shot beats a fifty percent two-point shot, every team started shooting threes. The insight was correct, and it stopped being an advantage the moment the market was corrected. What separated the Warriors was not the math. It was Klay Thompson and Steph Curry, and Draymond Green, who survived the space they opened.

He put it as a maybe rather than a verdict. “If you don’t have anything unique and advantageous without AI in the equation, AI isn’t going to actually bring that to you.”

My framing has been that tools should magnify what you are already great at, by ten or a hundred times. I said it again on air. Santosh took it and added the half I had never stated. “Don’t use AI to help you improve a weakness that might be better done by actually adding to your team.”

That is a hiring rule wearing an AI costume. A gap in your firm is a person-shaped problem. Covering it with a model leaves you mediocre at that thing permanently, with better documentation. I said absolutely, and we moved on. I have chewed on it since. In the same stretch, he described asking his principal what she thought her superpower was, and framed his read as an argument rather than a finding: most funds probably have duplicative superpowers on the team and have done okay anyway.

The thing I keep returning to is the least glamorous. He thinks the skills file will become one of the more important artifacts inside a firm, along with every reference it reaches into. “A lot of how you get AI performant is not different than when you have new hires coming in. You need to document how work is done.”

At Dynamo, an agent drafts the portfolio update and headline numbers, then several people comb it for accuracy and completeness, which frees the quarter for the deep thesis piece. What I liked most is what AI did to his old process docs, some untouched for two years. Some he improved, because a model holds more context than a person. Others he decided did not need to exist, since they only existed to account for a human in the loop. That is operations hygiene in a new hat, and the least copyable thing in the episode.

Where I am still working it out is taste. Santosh asked whether you could teach it to a model. I said I never like to say never with technology, and then I said today, no. I believe both halves and know they do not sit together.

The bigger tension is with my own first episode. Motion is not movement. I argued in July that venture mistakes activity for progress, and spent a good part of this one advocating for activity. Tinkering that changes what you ship is movement. Tinkering that only changes what you use is motion. I am not sure the line holds. I have the Replit receipt.

The moment I keep coming back to landed before the harnesses and the agents. Santosh asked whether it was strange that we had circled back to what our parents were teaching us at eight, nine, ten years old. Just be a good dude. I said being a good person is an advantage, and I meant it as a claim about competitive dynamics, not a sentiment.

Then we spent the back half on harnesses and agents and skills files, and I closed by saying the individual contributor is dead forever. I wrote a version of that in Everyone (and Everything) Is a Manager Now and still think it is right. But we settled the human part first and spent the rest on tools. Either that is the joke, or it is the point.

Listen here: https://carryonpodcast.com/podcast/ai-wont-get-you-access-the-human-skills-that-still-matter-most/

With gratitude,

earn

Kelli Fontaine worked in the athletic media relations department at the University of Colorado. She described what you do after a bad football game. You go find the stat that is true. “We could say we had the longest punt in history.” The number is real. It is also a record of a loss.

That is the whole conversation, sitting there in the first three minutes.

Kelli is a partner at Cendana Capital and may be the most data-forward allocator we have had on. Her team runs 78 dashboards. What I did not expect was how carefully she keeps her own numbers from hardening into rules.

The conversation sharpened something I had been circling. In early-stage venture, a finding is not a law. It is a timestamp. A good analysis has a shelf life the analyst does not control.

Three things I took.

First, she dates her own findings instead of defending them. When Kelli joined Cendana she built the data systems, then ran the analysis on their own book. Pre-seed against seed. Same graduation rate. Same mortality, which she thinks was probably acqui-hires. Better multiple on the year of entry. More risk, better outcome.

In our prep call she had put this to me as having grown skeptical of that conclusion, and I read that framing back to her on air. She did not repeat the word, and she did not defend the finding as durable either. She placed it: “it’s one of the things that worked in a market at that point in time.” Then she gave the mechanism that closed it. San Francisco filled with capital focused on early stage. Institutionalized angels became a category. Pre-seed, in her words, “probably arbitrage away in the Bay Area specifically.”

That is more useful than recanting. She keeps the analysis and puts a date on it. “That was a learning for me,” she said, and the learning was not that she had been wrong. It was about why a thing worked, and what that means now.

Second, a harder market argues for more shots, not fewer. I asked how the change in graduation rates shows up in diligence on a Fund I or Fund II, and said the part that seemed obvious: it is tougher now, a manager has to get so many things right to land even one or two fund returners.

She agreed, then went somewhere I did not expect. The instinct she keeps seeing in response is concentration, and she gets pitched a lot of 15 company portfolios. Her read runs the other way: “if graduation rates are lower, you know that would mean that you should probably have a few more shots on goal today, because things can look good at the early stages.”

Run the mechanics. Concentration only pays if your ability to identify the winner improved. A lower graduation rate does not improve identification. It lowers the base rate. Same shooting percentage, fewer makes, so you need more attempts. Her ask of a concentrated manager is not that they drop the structure. It is that they articulate why it is right, and why a prior hit rate repeats.

Third, acqui-hires are a return line. Looking back at Cendana’s historical returns, roughly 10% came from acqui-hires and roughly 10% from modest exits. Same contribution. I have spent years hearing acqui-hires described as what you settle for when the real outcome did not happen. In her math they pay about what a decent exit pays. She paired it with a colder point: it is very rare that a company comes back to life after year seven. Venture built enormous muscle around sourcing, picking, supporting, and winning. Portfolio management, she said, “has been missed along the way.”

Where I am still working it out is founder secondaries. I brought the alignment framing into the room, that founder selling should track GP selling. She came at it differently, and hers is better. Venture runs on hospitals, endowments, foundations, and pensions, so a founder taking cash ahead of those LPs is a fact about sequence, not only optics. Then read it as information. If a founder is de-risking, she said, “almost taking that as a signal is it’s time for you to de-risk some too.”

I prefer her reading to mine, and I am still not sure it resolves cleanly. She drew the line herself: is it enough “to buy a house and like give them some breathing room, or is it enough to make them extremely wealthy?” That line gets drawn by circumstance as much as by conviction. I have watched founders with no cushion make choices that looked like doubt and were just rent. I did not push on it in the room. I would want more resolution before treating sale size as a read on belief.

The phrase I keep sitting with is what she is not underwriting: “the king making marks.” I wrote about a version of this in The Motion Problem, that when capital concentrates hard enough, kingmaking starts doing the work judgment used to do. Kelli is running the LP-side version of the same worry, with dashboards. She would rather know the customer quality and the ACVs than know who led.

That is the data discipline I trust. Not the dashboard that answers. The dashboard that keeps asking whether last year’s answer still holds.

Listen here: https://swimmingwithallocators.com/podcast/finding-alpha-before-consensus-data-judgment-and-early-stage-venture/

With gratitude,

earn

Bands almost never break up over the music.

Ask anyone who has been in one. It does not end because the songs got worse or because somebody stopped being able to play. It ends over the credit. Who wrote the bridge. Whose name goes on the record. Who gets paid when a car commercial licenses the chorus eleven years later. Nobody has that fight in year one. In year one there is a van and a shared amp and nothing to split, so the question never comes up, and everyone tells themselves the silence is alignment. It is not alignment. It is an unpriced asset. The fight arrives on schedule the moment there is something worth arguing about, and by then the arrangement between the people is the fragile part, not the music.

Near the end of episode three I put three archetypes on the table, because I think every firm is one of them whether or not it has admitted it.

Some firms are the Rolling Stones. This is the band. We are doing this into our seventies, or until we quit. We ain’t adding nobody new. Some are small market franchises. Utah, Oklahoma City. We are not getting top free agents, so we had better be excellent at the draft. And some are the Lakers. We do not care about draft picks. Once somebody proves they are amazing, our brand is better than theirs, and they will come. We are watching that one happen right now, with people folding firms they started themselves to go join a bigger name.

The taxonomy sorts firms by how they hold together and how they replace people, which is more useful than sorting them by AUM or stage. And the band is the one most people are actually building. It is also the only one of the three with no plan for its own failure. The franchise has a draft. The brand has a recruiting machine. The band has a handshake.

Most of the episode is about the least glamorous part of this job, which is sourcing. Santosh’s framing is that the shift already happened and a lot of firms have not noticed: you stop tracking companies and you start tracking people, sometimes years before they come to the realization that they want to go found something. At pre-seed and seed there is no database and no portfolio page to scrape. There is only whether they know your mettle before they need you. That is a different job than the one most of us were trained to do, and it does not produce a pipeline you can screenshot for an LP update.

At my stage the problem inverts. When I started in 2015, sourcing at Series A still meant something, because there were fewer firms and much less information moving between them. Now everything ends up in a database, so I am not sure proprietary deal flow at traction stage is a real thing anymore. Anybody can find it. Can you win it. Can you show a founder why you are the right partner, and then actually help them inflect.

Santosh’s answer for how you earn that is plainer than it sounds. Make a promise, know in advance which ones you can keep, and then keep them. Founders run the list afterward, and so does everyone watching. Which is really a conversation about brand. We learned it at Kauffman and I have never found a better version: your brand is what people say when you are not around.

The middle stretch of the episode is solo GP versus partnership, and the way that question usually gets asked is about economics and speed. The way it should get asked is about self-knowledge. Do you know how you behave when you are wrong in front of someone whose opinion you need. A partnership is not a structure for making decisions. It is a structure for surviving disagreements, and Santosh is right that the ones without a real conflict resolution process do not blow up. They poison slowly. Resentment compounds while everyone stays professional about it. In a firm the unpriced asset is carry splits, decision rights, and whose name is on the deal when it works. That is the songwriting credit again.

Do not run a partnership like a dentist’s office. One admin at the front desk, three dentists, one building, nobody talking to each other. That is not a firm, it is a lease.

Sam Heshmati from Citizens Private Bank sits down partway through, and his stretch is the best articulation I have heard of why problem solving beats product pushing. He says their job is not to be the reason a company succeeds, it is to slightly increase the probability of success, and to do that for a lot of people. Products and services get commoditized. People and relationships do not. He is describing banking, and he is describing our job.

There is more in the forty-four minutes than I can carry into one essay. We get into why the easy version of your strategy is usually just a different hard thing, and what an associate is even for when diligence takes ninety minutes.

So here is the ask, same as the last two times, because it keeps working. Listen to the episode. Then tell us where we got it right and, more usefully, where we did not. Reply to this post, comment wherever you listen, or send me a note directly. If there is a question about this craft you think two GPs owe you a straight answer on, that is how episodes get made.

Write the songs. Then write down who wrote them.

Grateful to AngelList, WilmerHale, KPMG, and Citizens Private Bank for backing this from the start, and to the Heard Media team for turning two people talking into something worth your time.

with gratitude,
Earnest

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The last time Chris Schelling was on the show, the episode carried a title I still think about: Private Detective to Private Investments. He is back, and the seat has changed. Chris recently made the move to Aksia as a Managing Director, which hands him the kind of cross-asset vantage point over private markets that most of us only get to guess at. Alexa and I took full advantage.

What struck me this time is how much of the AI conversation happened on the allocator’s side of the table. Everyone asks how AI changes the companies we underwrite. Chris is just as interested in how it changes the underwriting. He gets into using AI for diligence and memos, training analysts with it as a kind of behavioral coach, and what it would actually mean to seat an AI agent at an investment committee. That last one sounds like a bit until you hear him walk through it.

On the bubble question, Chris threads it the way only someone who has lived a few cycles can: “You can have a bubble without true technological disruption occurring.” Both things get to be true at once. The technology is real. The prices can still be wrong. And he applies the same discipline to the fashionable short thesis of the moment: “It’s not legacy SaaS goes boom. Like that’s way too simplistic.”

Then there is the section I suspect people will replay. Chris walks through SPV sandwiches, layers of access stacked on layers of fees, and why the structure rhymes uncomfortably with 2008. He even sketches the start of a checklist for evaluating SPVs and the access claims that come with them. I will not spoil it here. If you have wired money into an SPV in the last couple of years, that stretch alone is the episode. Nick Cassin, who heads Sidley’s secondaries practice, joins the episode as well, and the back half moves through how the mega RIAs are building private markets platforms and what product diversity across the wealth channel actually requires.

The line I keep coming back to is the one Chris lands near the end: “In a world of AI tools, differentiated relationships, networks, and deep domain expertise matter more than ever.” If you read The Delusion Requirement last week, you can guess why that one stayed with me. The tools are getting evenly distributed. The human parts are not.

If the show has been useful to you, the best thing you can do is leave a rating and review wherever you listen. It matters more than most people realize.

with gratitude,
earnest

I’ve had one improv class (maybe two) in my life, usually at a Kauffman Fellows module. There is a rule they teach you in the first week of improv, before you are allowed to try to be funny. Two people walk onto a bare stage with nothing. No script, no set, no idea where any of it is going. The first person makes an offer, and it is usually a bad one. The scene does not survive on the quality of the offer. It survives on whether the second person accepts it and adds something. Yes, and. I’m sure you have heard of it. The moment somebody blocks, corrects, or waits for a better scene to arrive, the whole thing dies where it stands.

I have been thinking about that rule since Santosh Sankar and I sat down to record the first three episodes of Carry On. Santosh opened with the math. Over the last couple of years, something like 75 percent of everything LPs put into venture went to the top thirty funds. Everyone else, and that is not just emerging managers, that is everyone else, split the quarter that was left. Then he asked the question the math begs for: why would anyone start a venture fund right now?

My answer, on the record, was that you have to be delusional. Not kind of delusional. Definitely delusional. And I meant it as a compliment, because delusion is the exact trait we screen for in founders. Someone who can see every problem in front of them, assess all of that information honestly, and still expect to be the exception. We ask founders to carry that contradiction every single day. Starting a venture firm is just finally taking your own medicine.

Santosh has a story about this. A few years into building Dynamo, his wife looked over at him and asked, casually, so you think this is going to work? Then she answered it herself: what a dumb question. Of course he believed it was going to work. Why would he be doing it otherwise? Your self belief is a different thing from the actuality of what happens. Holding both of those at once is the job.

But delusion alone is not a strategy. It is noise with confidence. The thing that has to sit underneath it is a why, and this is where the episode got uncomfortable in the useful way. An allocator friend of mine recently passed along what another allocator told her: she needs one more venture firm the way she needs another bullet in the head. That is the room every new manager is walking into. Your why is not marketing copy for that room. It is your right to exist in it.

Differentiation is the same conversation wearing a suit. It is the word we all use and never define, and as this industry matured it collapsed into a sterile monoculture: identical websites, identical value add, identical posts, everyone quietly afraid that the tallest flower gets cut. Real differentiation is not a slide. It is the compounding of all the small ways you approach the craft differently. A 24 hour response rule. How you actually run diligence. What you still do for a founder in month nine that you promised in the first meeting. Most of us are some shade of blue. The work is knowing exactly which shade you are and saying it out loud.

We also get into the part I keep having to relearn: none of this works if you wait to be perfect. Somebody prominent in this business, I heard it secondhand so I will not name them, said the optimal level of cringe is not zero. The best firms right now, as Santosh put it, operate like media companies with investment capabilities attached, which means the reps are public, and some of the reps are bad, and the bad reps are where the feedback lives. That is improv again. You do not get to workshop the scene in private first.

There is more in the episode than I can carry into one essay. Sam Heshmati of Citizens Private Bank joins in the middle and traces the white glove lineage from First Republic, which is itself a case study in a why surviving a change of jersey.

So here is the ask, same as last time, because it worked. Listen to the episode. Then tell us where we got it right and, more usefully, where we did not. Reply to this post, comment wherever you listen, or send me a note directly. If there is a question about this craft you think two GPs owe you a straight answer on, that is how episodes get made.

The cards are stacked. The scene starts anyway. Yes, and.

Grateful to AngelList, WilmerHale, KPMG, and Citizens Private Bank for backing this from the start, and to the Heard Media team for turning two people talking into something worth your time.

with gratitude,
Earnest

Listen on your favorite platform.

• YouTube

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• Full episode page

There is a moment early in this conversation when Senia Rapisarda describes how she spent years educating Canadian pension plans on what venture actually is. Her line stuck with me. Venture is agriculture, not geology. A bigger drill does not help you find a nugget that was never buried there. You plant kernels at the university level, at the incubator level, and then you provide a continuum of capital and wait. Twelve years later, Canada has managers on fund two, three, and four, and companies that stay home instead of heading south.

Senia joined Alexa and me from Toronto, where she leads HarbourVest’s Canadian strategy. Before that she was at BDC, where she helped design the Venture Capital Action Plan, a program built with one party and adopted by the next. In a moment this polarized, a policy that survives a change in government might be the strongest signal of all that innovation capital has become infrastructure.

That was the argument that landed hardest for me. Innovation capital is sovereignty. We tend to think of sovereignty as borders and defense budgets. Senia’s frame is that a country that cannot fund its own champions ends up de-risking companies at home and exporting the returns abroad. By her count, roughly 90 percent of late-stage Canadian tech rounds have been led by international managers. The talent is Canadian. The upside mostly is not. Breaking that cycle is the work.

The part of the conversation I keep replaying is her guidance for emerging managers. HarbourVest runs an open door policy, but the door is a starting line, not a finish line. Come back every six months with a fifteen minute update. Bring a co-investment before you ask for a fund commitment. She jokes that a fund commitment lasts longer than the average North American marriage, so date with a deal first. And know that everything gets logged. HarbourVest tracks what she calls your say/do ratio. Tell them what you will do, then do it, and you are building a track record before they ever wire a dollar. That framing feels right to me. Trust is not claimed in a pitch meeting. It accrues in the gap between what you said last time and what you did since.

She also gave the most honest answer I have heard to a question I have been asking a lot lately. She has four filters for durable companies: mission critical, big moat, capital efficient, and non-greedy founders. I asked her to pick the one that predicts survival through this cycle. Her answer was that it depends on your cash position. If you have cash, the moat matters most. If you do not, founder greed at the last raise is what kills you, because a too-high valuation destroys value in the round you cannot avoid.

Nick Cassin of Sidley closes the episode with a clear-eyed explainer on continuation vehicles, including why disclosure and equal information are the whole ballgame when a GP sits on both sides of the table.

Worth a listen.

With gratitude,
Earn

There is a version of a basketball player who never stops moving and never actually gets anywhere. Always cutting, always talking, always going east and west, and somehow the ball ends the possession in the exact same spot it started. Coaches have a phrase for this, and it is not a compliment: motion is not the same thing as movement. Most people confuse the two anyway.

I have been circling that same confusion in venture for a while now. Plenty of activity. Term sheets, panels, LinkedIn posts, another fund closing, another logo added to a deck. Not always much progress underneath it. I did not have a clean way to talk about that difference until Santosh Sankar and I sat down to record, and it turned out to be the first real conversation of the show we are calling Carry On.

Santosh runs Dynamo Ventures. I have known him long enough to trust that he will tell me when an idea is not as sharp as I think it is, which is most of what you want from a co-host and most of what is missing from venture capital content generally. We did not start this because the podcast market needed another one. We started it because the honest conversations about what it actually takes to build a firm mostly happen off the record, in DMs and side rooms, after the panel ends. We wanted to put more of that on the record.

Episode one is called Motion ≠ Movement. We get into why urgency and momentum get treated as the same thing when they are not, and what it looks like when capital and attention concentrate into a narrow set of AI deals and mega funds. We also spend real time on something less comfortable: the erosion of intellectual honesty in this industry, and what it costs a firm when kingmaking dynamics start doing the work that judgment used to do. Santosh walks through the eras of venture, the pendulum between concentration and unbundling, and why craft still matters even when capital alone can buy you a seat at the table.

None of that is a finished argument. Some of it we are still working out in real time, which you can probably hear. That is the point. We would rather practice this in public and be wrong on the record occasionally than polish something into a highlight reel that does not tell you anything you could not have guessed.

So here is a genuine ask: listen to the episode. Tell us where we got it right and, more usefully, where we did not. Reply to this post, comment wherever you are listening, or just send me a note directly. If there is a topic you think two GPs owe each other an honest conversation about, tell me that too. We are building the list of episodes off of exactly that kind of feedback.

Grateful to AngelList, WilmerHale, and Citizens Bank for backing this from the start, and to the Heard Media team for turning two people talking into something worth your time.

with gratitude,
Earnest

Listen on your favorite platform.

Youtube:
Apple
Spotify

Last week on Swimming with Allocators, we welcomed Teddy Repko of the Yuhaaviatam of San Manuel Nation, who shares how his global upbringing, risk-aware personality, and early trading career shaped his investing approach, and how a shift at Columbia University’s endowment from hedge funds to relationship-driven venture gave him a front-row seat to the asset class.

During the conversation he also breaks down how LPs really underwrite managers, balancing base rates, power-law math, and portfolio construction with deep people and relationship assessment, and flags both opportunities and risks in today’s market, from mega funds, AI-driven valuations, and rapid funding cycles to concentrated DPI, late-stage growth, and crypto.

A great episode that I hope you all enjoy.