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Speaker 1: This is Mesters in Business with very Red Holds on

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Speaker 1: Bloomberg Radio this weekend. On the podcast, I have an

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Speaker 1: extra special guest, Ken can Sell of Churchill Asset Management, CEO,

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Speaker 1: founder President. This is really a fascinating story. Ken was

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Speaker 1: there at the beginning of the private credit markets when

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Speaker 1: he was working at Drexel, and he's been at a

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Speaker 1: number of shops, including Chase and Carlisle. Really few people

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Speaker 1: in the industry have seen the growth of this from

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Speaker 1: a tiny, little niche form of credit to a trillion

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Speaker 1: dollar plus industry that's become a key part of asset

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Speaker 1: allocation and a key part of the management of foundations, endowments,

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Speaker 1: other large institutional investment. So I found this conversation really

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Speaker 1: to be absolutely a masterclass and totally fascinating, and I

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Speaker 1: think you will as well. With no further ado, my

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Speaker 1: conversation with Ken ken Sell of Churchill Asset Management. Ken

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Speaker 1: ken Sell, Welcome to Bloomberg. Thanks so much, very great

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Speaker 1: to be here and love love the format. Thanks so

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Speaker 1: much for coming. I've very much been looking forward to

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Speaker 1: this conversation. Let's start out by digging into your career,

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Speaker 1: which is really quite fascinating. You start at Drexel in

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Speaker 1: the m and a group. What was that like? That

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Speaker 1: had to be quite an experience. It was a fascinating

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Speaker 1: time and an incredible group of people. I will tell

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Speaker 1: you that you know, in many respects, you know, you

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Speaker 1: look at you look at experiences in your career and

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Speaker 1: think about you know how they influence you, and think

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Speaker 1: about you know, organizations, and you know the environment you

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Speaker 1: want to work in. And Drexel is an incredibly exciting

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Speaker 1: place to work. Young people given tremendous responsibility at frankly

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Speaker 1: a very young age in their careers. And I got

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Speaker 1: the opportunity to work with some really interesting folks who

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Speaker 1: continue today to be involved in private equity and private

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Speaker 1: credit and see them all the time and very proud

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Speaker 1: of that time. Was a great time from that era.

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Speaker 1: Any particular deals or events that stand out as as

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Speaker 1: highlights or really memorable, well, the deal everybody thinks about

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Speaker 1: in that era and kind of the defining deal was Rjr.

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Speaker 1: The Barbarians at the Barbarians at the Gate and financing.

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Speaker 1: What most people don't realize is that that deal had

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Speaker 1: been hanging around as a potential transaction for a long

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Speaker 1: time and a lot of firms had looked at it

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Speaker 1: and had had conversations with the company, and you know,

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Speaker 1: it was, you know, frankly for us, you know, younger guys,

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Speaker 1: and I was, you know, I was a you know,

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Speaker 1: an associate or VP. Back down, I was, you know,

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Speaker 1: one of the younger folks in the crew. It was

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Speaker 1: a bit of a tar bag be back then. No ords,

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Speaker 1: you know, the senior folks would go around and say, okay,

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Speaker 1: we're going to do yet another analysis on our JR.

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Speaker 1: I'm going to look at a buy out and look

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Speaker 1: at the pricing, look at the structure. So you know,

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Speaker 1: it got to the point where you know, it was

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Speaker 1: exciting at first as a deal, but I would say

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Speaker 1: over time we were all kind of under our desks

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Speaker 1: when when the assignment partner came around looking for somebody

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Speaker 1: to work on it. So, you know, it's funny how

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Speaker 1: deals turn out to be, you know, Bellweather deals and

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Speaker 1: known across you know, across the didn't look but it

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Speaker 1: didn't look better at the time. People were running, people

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Speaker 1: were running away from working on it. So so so

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Speaker 1: you end up at Chase Financial where you stand up

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Speaker 1: their high yield business. Tell us a little bit about that.

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Speaker 1: How did you get to Chase? Sure? And what was

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Speaker 1: it like back then? They weren't the giant player. They

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Speaker 1: weren't In fact, that was pre merger with Mittmanny Hanny

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Speaker 1: and Chemical and JP Morgan and et cetera. Well, you

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Speaker 1: know it was interesting, you know when you know, I

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Speaker 1: think all of us were a bit surprised when Drexel left,

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Speaker 1: you know, the corporate landscape and and you know, all

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Speaker 1: of us were out trying to figure out, okay, well

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Speaker 1: what you know, where do we go and and what

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Speaker 1: was fascinating about Drexsland The kind of the diaspora, if

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Speaker 1: you will, of that era was that we all basically

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Speaker 1: went out looking to take that experience, you know, particularly

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Speaker 1: in a high yield and kind of buy out and

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Speaker 1: financing and do it at either banks or you know,

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Speaker 1: other other investment banks. So I ended up a Chase

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Speaker 1: in the early nineties, and they, interestingly enough, had just

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Speaker 1: formed a section twenty. They really weren't in the investment

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Speaker 1: banking business, and they looked at the opportunity there and said, gee,

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Speaker 1: we should really have a you know, a high yield

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Speaker 1: business and a financing business. And so Tom Lebreck and

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Speaker 1: Art Ryan hired me to start their high eel business,

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Speaker 1: and it was a great it was a great place

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Speaker 1: to work. Unfortunately, you know, they went through a series

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Speaker 1: of about, you know, a dozen mergers in the period

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Speaker 1: of a probably five years. I love the joke about

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Speaker 1: the person who says they they're sitting at their same desk,

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Speaker 1: but like every three months they get a new set

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Speaker 1: of business cards, right, and they just keep a stack

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Speaker 1: of all their old ones. First we were what was it,

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Speaker 1: dime manny Hanney. There was just a run of acquisitions

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Speaker 1: until the behemoth that they pretty much are the mac

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Speaker 1: Daddy in the space. That's exactly right. And back then,

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Speaker 1: you know, it was again it was a very interesting

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Speaker 1: place to be because they had lots of capital and

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Speaker 1: they had lots of clients, but historically they had not

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Speaker 1: been in that business. So we started to hio business

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Speaker 1: there in the early nineties and frankly it was going

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Speaker 1: quite well until you know, the first of what turned

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Speaker 1: out to be many mergers. And then I left there

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Speaker 1: and joined a number of my colleagues from Drexel and

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Speaker 1: launched a business that, as it turns out, was pretty

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Speaker 1: much a carbon copy of the business we have today.

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Speaker 1: And it was a It was backed by the largest

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Speaker 1: bank in France. It was called Indo Suis Capital, and

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Speaker 1: in many respects it was a lot like Drexel in

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Speaker 1: the sense that super talented people, incredibly flexible, um, you know,

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Speaker 1: in terms of giving young people opportunity, et cetera. It

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Speaker 1: was a relatively small group, but we became one of

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Speaker 1: the most active lenders and financing sources and investors to

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Speaker 1: mid size US companies and had lots of very talented

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Speaker 1: folks that we worked with, so that that kind of

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Speaker 1: led one thing leads to another, and that led us

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Speaker 1: to led me to getting back with a lot of

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Speaker 1: my old colleagues from from Drexeland, you know, built quite

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Speaker 1: an interesting business there for almost ten years. So many questions,

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Speaker 1: So Indosuez Capital sounds so exotic French bank. What was

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Speaker 1: their focus? Why stay investing in mid market US private

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Speaker 1: private credit? Seems unusual? Right? So the first thing to

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Speaker 1: think about is that when we first met with them,

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Speaker 1: I'll never forget meeting with the gentleman who was heading

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Speaker 1: up the bank in the United States, and they essentially

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Speaker 1: had virtually no significant business in the US. They were

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Speaker 1: lending to aircraft, you know, under aircraft and had a

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Speaker 1: couple other very small businesses, but they aspired to be

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Speaker 1: a much larger player in the financing markets, and we

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Speaker 1: brought them a plan that you know, I think was

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Speaker 1: very similar to what the banks were doing at the time,

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Speaker 1: which was providing financing to private equity owned companies. Huge

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Speaker 1: area of growth in the economy. PE at that point

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Speaker 1: was really just developing in the middle market. You had

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Speaker 1: a lot of the big buyout firms, they were doing

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Speaker 1: the transactions in the eighties that the early nineties, but there,

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Speaker 1: you know, the these large firms were spinning off smaller

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Speaker 1: private equity firms and they were doing midsized deals and

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Speaker 1: so financing and actually investing co investing in those deals.

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Speaker 1: You know, it was a very interesting place to be

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Speaker 1: and it was a credibly fast growing area. In some cases,

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Speaker 1: the big banks weren't quite as interested in financing those deals.

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Speaker 1: So we created basically a mid market lending platform that

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Speaker 1: ultimately spun out some of the most talented and capable

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Speaker 1: folks you know, within the private debt world today. So

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Speaker 1: lots of folks work there that now run very large

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Speaker 1: alternative asset management firms and credit credit arms affirms. So

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Speaker 1: it was a very very interesting place. But we did

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Speaker 1: not only did the financing for deals, we actually invested

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Speaker 1: alongside those private equity firms as an equity partner. Right.

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Speaker 1: So the theory was, that's great that you're providing a loan,

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Speaker 1: but if you can co invest with them and get

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Speaker 1: the upside of partnering with some of the most successful

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Speaker 1: private equity funds in the United States, you know, a

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Speaker 1: great way to enhance your returns. We call that legal

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Speaker 1: insider trading. Hey, I know this private company is about

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Speaker 1: to get a giant line of credit and that's going

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Speaker 1: to help them go to the next level. Let's get

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Speaker 1: an equity piece. Also kind of like that, I mean,

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Speaker 1: I would say that what we what we really did

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Speaker 1: is focus on the private equity firms that really had

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Speaker 1: a great track record. You know, we knew the principles,

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Speaker 1: we knew that they had done. You know, a good

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Speaker 1: deal is acquiring you know, attractive and high performing businesses,

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Speaker 1: and so you know, we we looked to finance those deals,

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Speaker 1: but essentially said to those those private equity firms, look,

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Speaker 1: we you know, we we think you could do a

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Speaker 1: great job. We love your investment strategy, we love the

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Speaker 1: industries you invest in. You know, we'd love to co

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Speaker 1: invest with you, not not as a control but as

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Speaker 1: a minority investor. Right, So if they were acquiring a business,

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Speaker 1: you know, we would often take an equity investment as well,

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Speaker 1: and that model proved to be very very successful. Now,

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Speaker 1: if you think about the time and place that we

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Speaker 1: were operating, it essentially was the precursor to the current

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Speaker 1: private credit world, you know, in the words, you know,

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Speaker 1: really we were managed in investing um, you know, alongside

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Speaker 1: you know, leading private equity funds and managing the bank's capital.

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Speaker 1: We actually started raising third party money back then as well.

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Speaker 1: But that's really interesting. I want to circle back to

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Speaker 1: something you mentioned about how that middle market forms if

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Speaker 1: and let's let's put this in the frame work of

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Speaker 1: the nineteen nineties. The market, the public markets were doing great.

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Speaker 1: A lot of these companies were becoming very large, and

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Speaker 1: I think the traditional sources of financing were chasing the big,

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Speaker 1: bigger companies, and suddenly like a void developed underneath. Is

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Speaker 1: that a fair way to describe that. That's exactly right.

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Speaker 1: In fact, as things subsequently played out, what you saw

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Speaker 1: is that wave of bank consolidation that I referred to

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Speaker 1: ultimately brought banks. I mentioned Chase for example, started with

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Speaker 1: their section twenty when when we launched their high business

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Speaker 1: is the investment banking affiliates. Right, so now words Chase said,

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Speaker 1: wait a minute, we can be an investment bank. We're

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Speaker 1: going to form our own investment banking operation. In their case,

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Speaker 1: it was called Chase Securities is now JP Morgan Securities them.

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Speaker 1: But but what was happening is that wave of mergers,

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Speaker 1: you know, the elimination of Glass Stiegel and the ability

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Speaker 1: of banks to consolidate and form their own investment bank

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Speaker 1: in their own securities businesses led banks to what effectively

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Speaker 1: was a higher margin business. Right Rather than you know,

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Speaker 1: put all their capital in a single loan and hold two, three,

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Speaker 1: four or five million dollars a loan, they could actually

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Speaker 1: arrange to distribute the loan. And so what we saw

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Speaker 1: over that period of time was that banks became much

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Speaker 1: more in the moving business, if you will, as opposed

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Speaker 1: to being in the storage business. Right. So you know

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Speaker 1: where did that void get filled? It got filled ultimately

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Speaker 1: initially by you know, some of these more esoteric businesses

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Speaker 1: like Indoso as Capital and of course ge Capital had

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Speaker 1: a lending business very similar, but over time it ultimately

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Speaker 1: got filled by private capital managers, direct lenders, firms that

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Speaker 1: were raising institutional capital to invest in private companies. So

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Speaker 1: underserved in beginning really in the nineties, but as that

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Speaker 1: underserved dynamic continue to grow, and as the middle market

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Speaker 1: continue to grow. I mean, interestingly, the US middle market

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Speaker 1: is the third largest economy in the world. That's an

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Speaker 1: amazing stat about, right, that really is an incredible stat

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Speaker 1: So you're building out a middle market private credit bank,

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Speaker 1: and alone comes Carlisle and says, hey, we'd like to

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Speaker 1: absorb you. Tell us a little bit about that experience.

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Speaker 1: So one stop along the way. So in subsequent to

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Speaker 1: that business at endows who has I launched my own

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Speaker 1: firm in two thousand and six and we and this

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Speaker 1: is now further into that bank consolidation dynamic, and we

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Speaker 1: raised about five hundred millions of private equity. And the

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Speaker 1: thesis was, which turned out to be completely true, is

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Speaker 1: that these banks were going to move away from the

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Speaker 1: business of actually lending money to mid sized companies. It

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Speaker 1: was a huge and growing market, and in fact, asset

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Speaker 1: managers were going to become the giants of that business,

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Speaker 1: including firms like Carlisle and KKR and others, and so

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Speaker 1: to the extent that we could build a best in

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Speaker 1: class private credit direct lending platform, there would be buyers

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Speaker 1: of that business, because again, private equity firms always build

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Speaker 1: things to sell them, right, And so five years into

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Speaker 1: that growth of our business, we sold a firm to

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Speaker 1: Carlisle in twenty eleven. Carlisle was in the process of

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Speaker 1: going public. So if you think about it, they're bankers

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Speaker 1: were saying to them, you know, you're great in private equity.

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Speaker 1: You've got a big real estate platform. By the way,

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Speaker 1: you're not really in this private credit business, and that's

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Speaker 1: really going to be a growth area. You should have

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Speaker 1: a platform there. And that's really what was the genesis

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Speaker 1: for our sale to Carlisle. So let's talk a little

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Speaker 1: bit about the history of your business. You launch your

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Speaker 1: own firm, and a couple of years later, along comes

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Speaker 1: Carlisle and says, hey, let's talk about integrating what you

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Speaker 1: do into what we do. How did that come about

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Speaker 1: and what was that like during that period? Yeah, sure,

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Speaker 1: Now it was interesting. Um, of course we were coming

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Speaker 1: out of the GFC at that point, and you launched

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Speaker 1: an O six, launched six and we sold to carl

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Speaker 1: in twenty eleven. So so let's let's before we jump

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Speaker 1: to Carlisle. Then let me ask you private credit. The

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Speaker 1: bank's freeze up in O eight oh nine, right, how

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Speaker 1: was your business during that period? Was that a target

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Speaker 1: rich environment or what was that like? So interestingly enough,

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Speaker 1: somewhat different from today, right, because if you think back then,

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Speaker 1: we were we were one of only a handful of

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Speaker 1: private credit firms. The amount of liquidity or dry powder

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Speaker 1: in our world was much more limited. The banks were

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Speaker 1: essentially out of the business, right, They weren't landing at

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Speaker 1: that point. So while there was a lot of dry

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Speaker 1: powder and private equity probably back then two hundred billion

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Speaker 1: or so of liquidity, the private equity firms really did

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Speaker 1: not have a large amount of private dat to finance

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Speaker 1: their They were a handful of us, right, So you know,

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Speaker 1: we saw some opportunities, but I would say that it's

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Speaker 1: really only been in the last ten years where you've

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Speaker 1: seen this tremendous growth growth in private credit. So today,

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Speaker 1: for example, the situation is very different. Right. Yes, there's

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Speaker 1: a lot of aquidity in private equity, but there's also

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Speaker 1: a lot of aquidity in private credit to be able

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Speaker 1: to finance those transactions, so a very different dynamic than

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Speaker 1: we saw back in two thousand and seven, two eight,

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Speaker 1: two thousand and nine. That being said, we stuck tornating.

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Speaker 1: We stayed focused on high quality companies. Our track record

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Speaker 1: and performance through the GFC was very very good, and

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Speaker 1: so when we came out of the GFC, my private

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Speaker 1: our private equity owners were starting to think, Okay, well,

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Speaker 1: how do we monetize this investment we made? And fortunately

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Speaker 1: for us, there were a number of large scale alternative

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Speaker 1: asset managers like Carlisle that we're looking to grow in

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Speaker 1: private credit. Carlisle was in the midst of going public

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Speaker 1: at that point, and I know David and Bill, the founders,

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Speaker 1: for well over almost two decades, and so I approached

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Speaker 1: them about the opportunity of potentially having Churchill become the

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Speaker 1: private credit business within the broader Carlisle grow. So you

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Speaker 1: approached them, they didn't come knocking on your door. That's

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Speaker 1: very fascinating. I did approach them, and um, you know,

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Speaker 1: it quickly became clear that the fit was very very good.

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Speaker 1: Um it was something that gave them a broader platform

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Speaker 1: in terms of the ability to you know, to provide

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Speaker 1: private credit and frankly it was an area that that

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Speaker 1: all the analysts were saying was going to be an

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Speaker 1: air of tremendous growth. So we did the deal in

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Speaker 1: twenty eleven, and um, I kind of gave up my baby,

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Speaker 1: if you will. Um So I went from being a

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Speaker 1: founder and an owner to being more of an employee

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Speaker 1: and a and a member of the Carlisle um and

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Speaker 1: you know, for several years, uh, you know, we operated

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Speaker 1: as part of their you know, it's really their direct

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Speaker 1: lending platform. Of what led to you saying it's time

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Speaker 1: to spin out and be a standalone again. So a

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Speaker 1: couple of things, you know. One was I found that

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Speaker 1: once you're a founder and you have a lot more

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Speaker 1: control over your you know, your your culture and your

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Speaker 1: people and the environment and and really the growth dynamics

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Speaker 1: and your business that I missed that you know, I missed,

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Speaker 1: you know to me, you know, my business and really

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Speaker 1: the business you know that that I've done throughout my

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Speaker 1: career is really all about the people. You know, you see, firms,

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Speaker 1: I mean, capital is a commodity, right, so at the

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Speaker 1: end of the day, it's really about building, developing and

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Speaker 1: growing your people. And so for me, the ability to

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Speaker 1: go back and really be in control of that dynamic.

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Speaker 1: Be where I was, which was a founder and an

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Speaker 1: owner of my own firm, was really where my heart was.

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Speaker 1: And so, you know, I went to David and Bill

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Speaker 1: in two and fourteen. We had kind of served out

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Speaker 1: our three year term there and there was an opportunity

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Speaker 1: to to do that, and they were incredibly gracious and

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Speaker 1: allowing me to do that. And you know, for me,

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Speaker 1: I also saw the business changing. And what I was

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Speaker 1: seeing was that the ability to deliver large amounts of

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Speaker 1: capital to really operate like a bank. Right. You know,

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Speaker 1: we saw this transition starting in late nineties and early

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Speaker 1: two thousands, but at this point you were seeing large

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Speaker 1: scale institutions allocate significant dollars to private credit, right, and

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Speaker 1: it became a very well accepted asset class. Why because

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Speaker 1: the banks had been leaving these midsized companies needed financing.

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Speaker 1: And now it wasn't a matter of oh, we're going

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Speaker 1: to invest ten or twenty or thirty million dollars in

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Speaker 1: a private credit deal. It was we're going to be

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Speaker 1: the lead lender and a four hundred million dollars deal.

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Speaker 1: And so what I felt was that there was going

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Speaker 1: to be a tremendous need for significant capital, and so

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Speaker 1: joining a firm that had that was really an asset

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Speaker 1: owner and that could actually invest their own balance sheet

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Speaker 1: alongside third party investors was going to be a key

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Speaker 1: to being able to grow the business. In the case

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Speaker 1: of you know, the firm that we ultimately partnered with, Interestingly,

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Speaker 1: tia had just acquired Nuvine, so they had not only

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Speaker 1: did they have a balance sheet and were a significant

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Speaker 1: investor in private credit. In fact, TIAA is the second

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Speaker 1: largest investor in private credit in the world. So we

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Speaker 1: found a good partner, but they also owned an asset

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Speaker 1: management platform, so they had institutional distribution in the ability

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Speaker 1: to raise capital from third parties globally. So you know

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Speaker 1: what we saw, and you know, I've formed a relationship

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Speaker 1: back in twenty fourteen fifteen with jose Meniah who is

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Speaker 1: now the CEO of Nuvine and actually still sits on

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Speaker 1: our board today, and I could see his vision for

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Speaker 1: where he wanted to grow this business and it was

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Speaker 1: completely aligned with mine. And so the opportunity to launch

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Speaker 1: relaunch effectively my firm with our name by the way,

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Speaker 1: which is kind of nice with my partners and by

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Speaker 1: the way, all of my partners ultimately joined me. All

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Speaker 1: my founding partners joined me to join as an affiliate

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Speaker 1: of Nuvene and tia committed an initial amount of capital.

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Speaker 1: Back then it was three hundred million dollars and don't

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Speaker 1: lose it. Today we manage over twenty three billion dollars

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Speaker 1: for TIAA and take very very seriously our obligation to

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Speaker 1: their members. College professors, university professors, healthcare workers over five

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Speaker 1: million of them, you know, all across the US. And

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Speaker 1: every time I have one of these conversations, invariably and

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Speaker 1: variance probably you two. You know, Well, I've got an

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Speaker 1: uncle who's a college professor or a somebody who's a teacher,

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Speaker 1: and so I'm passionate about education, and so the ability

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Speaker 1: to invest in behalf of you know, millions of college

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Speaker 1: and university professors and teachers is something that means a

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Speaker 1: lot to me. So this raises a really interesting question.

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Speaker 1: When you began this industry really didn't exist. Credit was

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Speaker 1: you know, a twinkle in a few people's eyes. And

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Speaker 1: now we've watched it grow and become institutionalized, and you

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Speaker 1: go from Carlisle to Nouvene and TIA, what does the

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Speaker 1: state of private credit look like today and how different

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Speaker 1: is it from what we saw in the two thousands

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Speaker 1: and nineties, even the early days in the eighties. Well,

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Speaker 1: the first answer is it's very different in a number

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Speaker 1: of ways, but I think fundamentally better. And let me

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Speaker 1: explain what I mean by that. So, if you went

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Speaker 1: back to you know, kind of the bank era, right

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Speaker 1: when banks were doing these mid market loans, what you'd

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Speaker 1: see is that whether it's Chase Manhattan or Chemical Bank

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Speaker 1: or JP Morgan or whoever, what you would see is

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Speaker 1: these banks would make a loan and they would hold

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Speaker 1: virtually all that loan on their bank sheet. So you

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Speaker 1: would see pretty high concentrations of you know, one hundred,

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Speaker 1: two hundred million, three hundred million, all essentially sitting on

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Speaker 1: a single balance sheet of the bank. So obviously risk managers,

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Speaker 1: you know and you know and CROs we're very focused

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Speaker 1: on how do we manage that risk and diversify that

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Speaker 1: that credit risk that they were taking on in mid

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Speaker 1: market companies. What's fascinating about the model today and really

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Speaker 1: coming out of the GFC is if you look at

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Speaker 1: the best private credit managers today, the first thing you

396
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Speaker 1: see is that we compete for capital based on performance, right,

397
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Speaker 1: So we attract investors based on delivering solid risk adjusted

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Speaker 1: returns as opposed to banks that are basically looking to

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Speaker 1: make loans to drive short term earnings. So I would

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Speaker 1: say that the transition away from banks has helped diversify

401
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Speaker 1: the investments in private credits. What do we mean by that?

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Speaker 1: If you look at our funds today, we manage about

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Speaker 1: forty six billion capital at Churchill today and we'll talk

404
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Speaker 1: about the acquisition that Navine did of Arkmont in a

405
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Speaker 1: few minutes. But at Churchill Historical Business we manage that

406
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Speaker 1: capital on behalf of over fifteen hundred investors globally. So

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Speaker 1: when you think about the individual exposure to a specific

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Speaker 1: name in our funds, it represents less than one half

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Speaker 1: of one percent of the portfolio. So those investors are

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Speaker 1: getting an incredibly diversified and I would argue lower risk

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Speaker 1: profile than if, for example, one bank makes a four

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Speaker 1: hundred million dollars loan and holds the whole thing on

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Speaker 1: their balance sheet. So in that sense, it's very performance driven.

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Speaker 1: It's meaning the best managers attract capital, which was not

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Speaker 1: the case in the banking world. Two, the investments are

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Speaker 1: held over a broad range of institutional investors and highly

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Speaker 1: diversified because of the nature of how we fund our loans.

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Speaker 1: They're not held by one fund in our case, they're

419
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Speaker 1: held by separately manage accounts, coming funds, publicly registered vehicles, etc.

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Speaker 1: So healthier in the sense that the risk is more diversified.

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Speaker 1: And then thirdly, I would say, in the case of

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Speaker 1: of of of our business, we have a number of

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Speaker 1: real advantages over you know, over our competitors and over

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Speaker 1: banks that give us, I think, a better and ability

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Speaker 1: to deliver better outcomes for our investors, including the fact

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Speaker 1: that TIAA as our largest investor, invest directly alongside every

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Speaker 1: investor in our you know, in our in our in

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Speaker 1: our firm. And I want to put a little meat

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Speaker 1: on the bones when you were talking about the growth

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Speaker 1: of the space private debt AUM has grown to one

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Speaker 1: point three trillion dollars. That's a five x increase since

432
00:24:50,840 --> 00:24:55,200
Speaker 1: the financial crisis, and a doubling since twenty fifteen. So

433
00:24:55,480 --> 00:24:57,920
Speaker 1: this is not like a little niche anymore. This is

434
00:24:57,920 --> 00:25:01,480
Speaker 1: a trillion dollars space. Absolutely, And you know it's funny

435
00:25:01,480 --> 00:25:02,920
Speaker 1: when I you know, when I was on the road

436
00:25:03,440 --> 00:25:05,600
Speaker 1: in the early days, you know, talk about you know,

437
00:25:05,960 --> 00:25:10,480
Speaker 1: even even post GFC, you'd meet with large scale institutions

438
00:25:10,520 --> 00:25:16,600
Speaker 1: and you'd talk about senior secured loans, private lending covenants,

439
00:25:16,800 --> 00:25:20,440
Speaker 1: reasonable leverage, etc. Etc. And they would look at you

440
00:25:20,480 --> 00:25:23,320
Speaker 1: and say, well, that's all fantastic and sounds really interesting,

441
00:25:23,320 --> 00:25:25,760
Speaker 1: and the risk adjusted returns look really good, but we

442
00:25:25,800 --> 00:25:28,160
Speaker 1: don't really know where to put it right. In words,

443
00:25:28,200 --> 00:25:31,760
Speaker 1: it's not private equity, and it's not traditional fixed income,

444
00:25:31,840 --> 00:25:34,920
Speaker 1: you know, like investment grade fixed income, and so it's

445
00:25:34,920 --> 00:25:38,000
Speaker 1: sat in this kind of middle ground, and you know,

446
00:25:38,119 --> 00:25:43,439
Speaker 1: it took a while before larger institutions really accepted that

447
00:25:43,560 --> 00:25:46,520
Speaker 1: this could be a very attractive place to earn very

448
00:25:46,520 --> 00:25:50,879
Speaker 1: good risk adjusted returns. And early days it was you know,

449
00:25:51,000 --> 00:25:57,280
Speaker 1: probably ten percent, maybe maybe twenty percent of investors that

450
00:25:57,320 --> 00:26:00,080
Speaker 1: we would meet with that would really be allocating to

451
00:26:00,480 --> 00:26:04,800
Speaker 1: private credit. Today, ninety percent of the investors we meet

452
00:26:04,800 --> 00:26:07,840
Speaker 1: with have not only allocated to private credit, but there

453
00:26:07,920 --> 00:26:11,639
Speaker 1: they have a plan to increase their allocation to private credit.

454
00:26:11,720 --> 00:26:13,639
Speaker 1: So what what I've been able to, you know, have

455
00:26:13,680 --> 00:26:15,399
Speaker 1: a kind of a front row seat too during my

456
00:26:15,480 --> 00:26:21,160
Speaker 1: career was this tremendous transition from the mid market lending

457
00:26:21,200 --> 00:26:25,400
Speaker 1: business being really a bank led business, and then kind

458
00:26:25,400 --> 00:26:28,000
Speaker 1: of had an interim stop at ge Capital where it

459
00:26:28,080 --> 00:26:29,919
Speaker 1: was more of a kind of a finance company, if

460
00:26:29,920 --> 00:26:33,000
Speaker 1: you will, and then really accelerating over the last you know,

461
00:26:33,359 --> 00:26:36,880
Speaker 1: fifteen twenty years of being really an asset management business

462
00:26:36,880 --> 00:26:39,760
Speaker 1: in some respects no different than private equity right. In fact,

463
00:26:39,840 --> 00:26:42,960
Speaker 1: some private equity firms have private credit arms that managed

464
00:26:43,000 --> 00:26:46,720
Speaker 1: credit as well as equity. And you mentioned the acquisition

465
00:26:46,800 --> 00:26:50,560
Speaker 1: of Archman Asset Management by Nouvene. Tell us about the

466
00:26:50,640 --> 00:26:53,720
Speaker 1: thinking behind that. Does that get integrated to Churchhill or

467
00:26:53,800 --> 00:26:57,160
Speaker 1: is that a co investor? How does that work out? Sure? So,

468
00:26:57,560 --> 00:26:59,400
Speaker 1: you know, we you know, over the course of our

469
00:26:59,480 --> 00:27:04,760
Speaker 1: time as part of Nivene, it's been a fantastic partnership.

470
00:27:05,560 --> 00:27:09,080
Speaker 1: We've had great support from first Roger Ferguson, the former CEO,

471
00:27:09,160 --> 00:27:11,560
Speaker 1: and now to sound Brown Duckett whose current CEO of

472
00:27:11,560 --> 00:27:15,360
Speaker 1: TIAA and the CIO CEO and then also the CIO

473
00:27:15,440 --> 00:27:19,840
Speaker 1: as well. But what we saw was that we were

474
00:27:19,880 --> 00:27:23,760
Speaker 1: really not truly a global private credit manager. We were

475
00:27:23,880 --> 00:27:27,840
Speaker 1: one hundred percent focused on managing investments in the US.

476
00:27:29,040 --> 00:27:31,960
Speaker 1: About three or four years into our business, we TI

477
00:27:32,119 --> 00:27:35,639
Speaker 1: TIA actually moved all of the management of their private

478
00:27:35,640 --> 00:27:39,160
Speaker 1: equity fund commitments, all of the management of their private

479
00:27:39,160 --> 00:27:41,679
Speaker 1: equity co investments, and so we went from being just

480
00:27:41,880 --> 00:27:46,640
Speaker 1: a private debt investor to being a private capital investor.

481
00:27:46,720 --> 00:27:49,359
Speaker 1: And so that was a big event for us because

482
00:27:49,760 --> 00:27:52,560
Speaker 1: all of those private equity relationships as a limited partner

483
00:27:53,080 --> 00:27:59,040
Speaker 1: are fantastic drivers of knowledge and relationships and deal flow

484
00:27:59,440 --> 00:28:01,919
Speaker 1: to finance those deals with those private equity firms. So

485
00:28:02,320 --> 00:28:06,280
Speaker 1: today we manage over two hundred and seventy private equity

486
00:28:06,320 --> 00:28:11,200
Speaker 1: fund commitments and co invest alongside those investors. Interestingly enough,

487
00:28:11,680 --> 00:28:16,160
Speaker 1: that business, our business today is virtually identical to the business,

488
00:28:16,240 --> 00:28:18,800
Speaker 1: but much bigger than the business we had at Indo

489
00:28:18,880 --> 00:28:22,680
Speaker 1: Suez over twenty years ago. Meaning you're doing lending, you're

490
00:28:22,720 --> 00:28:25,440
Speaker 1: co investing in the equity. But what we didn't have

491
00:28:26,080 --> 00:28:28,040
Speaker 1: when we really stepped back and looked at it, we

492
00:28:28,080 --> 00:28:31,639
Speaker 1: didn't have Europe right. We didn't have an ability to

493
00:28:31,760 --> 00:28:35,000
Speaker 1: do what we do in the context of a European

494
00:28:35,720 --> 00:28:41,160
Speaker 1: market that was in many respects developing very rapidly and

495
00:28:41,440 --> 00:28:45,400
Speaker 1: probably five years behind the US. Does ARC mount solve

496
00:28:45,440 --> 00:28:48,080
Speaker 1: that problem for you? They do, And in fact, when

497
00:28:48,120 --> 00:28:51,680
Speaker 1: we started looking at potential partners, and I mean partners

498
00:28:51,720 --> 00:28:54,200
Speaker 1: in a very real sense. We looked at pretty much

499
00:28:54,200 --> 00:28:57,120
Speaker 1: all the direct lenders in Europe and what we saw

500
00:28:57,160 --> 00:29:00,120
Speaker 1: in arc Mount was in many respects the car and

501
00:29:00,200 --> 00:29:05,360
Speaker 1: copy of US in the United States. Entrepreneurial had been

502
00:29:05,400 --> 00:29:07,880
Speaker 1: part of a big firm at one point, had spun

503
00:29:07,920 --> 00:29:13,280
Speaker 1: out from that firm. We're very much focused on high quality,

504
00:29:13,680 --> 00:29:18,400
Speaker 1: conservative credits, you know, primarily private equity financed and owned businesses.

505
00:29:18,440 --> 00:29:21,239
Speaker 1: So you know, a mirror image of many respects of

506
00:29:21,240 --> 00:29:23,520
Speaker 1: what we were doing in the US mental market they

507
00:29:23,560 --> 00:29:26,240
Speaker 1: were doing in the mid and upper mental market in Europe.

508
00:29:26,560 --> 00:29:31,440
Speaker 1: And because Europe has been roughly five to ten years

509
00:29:31,440 --> 00:29:34,280
Speaker 1: behind the US in terms of that bank transition that

510
00:29:34,360 --> 00:29:39,080
Speaker 1: I described, it was an ability to participate in essentially

511
00:29:39,120 --> 00:29:42,400
Speaker 1: the same transition that's been going on the consolidation. Of course,

512
00:29:42,400 --> 00:29:46,280
Speaker 1: we just saw another consolidation with credit squeeze into ubs,

513
00:29:46,280 --> 00:29:49,959
Speaker 1: so Europe going through a very similar bank you know,

514
00:29:50,320 --> 00:29:54,040
Speaker 1: retrenchment as it relates to direct lending. Arcmont one of

515
00:29:54,040 --> 00:29:57,320
Speaker 1: the early adopters in Europe. They actually launched their firm

516
00:29:57,360 --> 00:30:00,560
Speaker 1: back in two ten, two eleven, so we wanted we

517
00:30:00,640 --> 00:30:04,320
Speaker 1: saw an opportunity to really partner with a leader in

518
00:30:04,360 --> 00:30:07,040
Speaker 1: the same business as US. And so what we did

519
00:30:07,120 --> 00:30:10,160
Speaker 1: really is take Churchill, which today is a top three

520
00:30:10,640 --> 00:30:13,120
Speaker 1: lender in the US middle market. We do over eleven

521
00:30:13,160 --> 00:30:16,280
Speaker 1: billion dollars of investment per year and over almost four

522
00:30:16,360 --> 00:30:20,200
Speaker 1: hundred companies. And we saw with arcmon and ability to

523
00:30:20,440 --> 00:30:24,440
Speaker 1: essentially take that model and partner with it a very

524
00:30:24,480 --> 00:30:27,520
Speaker 1: same market leading business in Europe, and we formed a

525
00:30:27,520 --> 00:30:33,200
Speaker 1: holding company called Nuvene Private Capital that basically is a

526
00:30:33,320 --> 00:30:37,239
Speaker 1: sixty seven billion dollar parent company that myself and the

527
00:30:37,280 --> 00:30:41,240
Speaker 1: CEO of Arcmond Co. Had And so we've taken a

528
00:30:41,360 --> 00:30:44,440
Speaker 1: market leading business in the US, a market leading business

529
00:30:44,440 --> 00:30:47,880
Speaker 1: in Europe, and now collectively we now have a global

530
00:30:48,400 --> 00:30:53,440
Speaker 1: private credit manager that can provide financing to cross border transactions,

531
00:30:53,800 --> 00:30:57,520
Speaker 1: can deliver a global solution to our investors. Right if

532
00:30:57,520 --> 00:31:00,640
Speaker 1: we have an investor that says, you know, I like Europe,

533
00:31:00,640 --> 00:31:03,720
Speaker 1: I like the US, can you give me a US

534
00:31:03,800 --> 00:31:07,719
Speaker 1: European global private capital solution? And obviously now we can

535
00:31:07,760 --> 00:31:10,920
Speaker 1: do that. Let's talk a little bit about twenty twenty two,

536
00:31:11,040 --> 00:31:14,280
Speaker 1: which for a lot of people in the capital markets

537
00:31:14,440 --> 00:31:19,120
Speaker 1: was a difficult and not exactly pleasant year. You guys

538
00:31:19,720 --> 00:31:22,760
Speaker 1: had a huge year. You invested eleven billion dollars. That's

539
00:31:22,760 --> 00:31:26,240
Speaker 1: a record three hundred and seventy five transactions. You raised

540
00:31:26,600 --> 00:31:32,320
Speaker 1: another eleven billion dollars in capital regard despite the economic environment.

541
00:31:32,760 --> 00:31:35,200
Speaker 1: Tell us a little bit about what made everything click

542
00:31:35,600 --> 00:31:39,000
Speaker 1: in twenty twenty two. Yeah, well, I think that you know,

543
00:31:39,080 --> 00:31:41,120
Speaker 1: twenty twenty two in many respects, and I would say

544
00:31:41,160 --> 00:31:43,520
Speaker 1: COVID in general, certainly the last three years of COVID

545
00:31:44,000 --> 00:31:47,000
Speaker 1: have really been a watershed for our firm. And I

546
00:31:47,000 --> 00:31:50,600
Speaker 1: think a lot of it has to do with investors

547
00:31:50,720 --> 00:31:56,720
Speaker 1: recognizing that how we invest and the advantages we have

548
00:31:56,920 --> 00:32:01,480
Speaker 1: in the ability to deliver attractive risk adjusted returns because

549
00:32:01,520 --> 00:32:05,680
Speaker 1: of our scale, our differentiated private equity relationships, and the

550
00:32:05,680 --> 00:32:07,880
Speaker 1: fact that we've been doing this a long time really

551
00:32:07,880 --> 00:32:10,680
Speaker 1: all came together in COVID. So it's not just twenty

552
00:32:10,720 --> 00:32:13,960
Speaker 1: twenty two. I would say it's rasically been through the

553
00:32:14,000 --> 00:32:17,200
Speaker 1: past three years. And what and what it's set the

554
00:32:17,280 --> 00:32:22,800
Speaker 1: stage for was investors really looking carefully at private credit

555
00:32:22,880 --> 00:32:25,880
Speaker 1: managers and saying, gee, you know, there's been this rush

556
00:32:25,880 --> 00:32:29,640
Speaker 1: to private credit. We need to really look deeper at

557
00:32:29,720 --> 00:32:32,360
Speaker 1: performance and track record. It's all well and good when

558
00:32:32,400 --> 00:32:35,280
Speaker 1: everything's going up, then the market environment, it's good and

559
00:32:35,680 --> 00:32:38,960
Speaker 1: you know, credits flowing. But when things get more difficult,

560
00:32:39,040 --> 00:32:43,280
Speaker 1: and certainly they did for everyone during COVID, how do

561
00:32:43,320 --> 00:32:46,600
Speaker 1: they manage to grow the business and how is their

562
00:32:46,640 --> 00:32:49,920
Speaker 1: portfolio performing in a in a you know, in a

563
00:32:50,200 --> 00:32:53,520
Speaker 1: essentially you know, an economy that was basically frozen. And

564
00:32:53,560 --> 00:32:57,200
Speaker 1: I think that what our investors saw is that Number one,

565
00:32:57,680 --> 00:33:02,200
Speaker 1: our portfolio held up incredibly well. We actually did not

566
00:33:02,480 --> 00:33:07,400
Speaker 1: have a full scale default during cod which is pretty interesting,

567
00:33:07,480 --> 00:33:09,800
Speaker 1: right when you think about, now, why is that? Well,

568
00:33:10,360 --> 00:33:13,720
Speaker 1: we financed high quality businesses. We don't invest in oil

569
00:33:13,760 --> 00:33:16,720
Speaker 1: and gas and restaurants in retail and more volatile businesses.

570
00:33:16,760 --> 00:33:19,160
Speaker 1: We stay away from all that, right, So we focus

571
00:33:19,200 --> 00:33:23,640
Speaker 1: on quality, We focus on market leaders. We partner with

572
00:33:24,360 --> 00:33:27,240
Speaker 1: private equity firms that themselves have a great track record

573
00:33:27,560 --> 00:33:30,280
Speaker 1: that focus on the kind of industries where we do invest,

574
00:33:30,320 --> 00:33:34,800
Speaker 1: which is technology and healthcare and business services and market

575
00:33:34,960 --> 00:33:38,960
Speaker 1: leaders in those areas, distribution logistics. So we go through COVID,

576
00:33:40,160 --> 00:33:43,960
Speaker 1: we perform extremely well. The portfolio does well, and investors

577
00:33:44,000 --> 00:33:46,680
Speaker 1: take note of that, and TIA takes note of that

578
00:33:46,720 --> 00:33:51,040
Speaker 1: as our largest investor, and so their allocations and investors

579
00:33:51,080 --> 00:33:56,360
Speaker 1: interest in US as a private credit manager grow exponentially,

580
00:33:56,720 --> 00:33:59,560
Speaker 1: and so you see our capital raising. You mentioned eleven

581
00:33:59,600 --> 00:34:02,400
Speaker 1: billion dollar last year. It was about twelve billion dollars

582
00:34:02,440 --> 00:34:05,520
Speaker 1: a year before that, and a significant number prior to that.

583
00:34:05,560 --> 00:34:09,920
Speaker 1: So during COVID we have raised well over thirty billion

584
00:34:09,960 --> 00:34:16,759
Speaker 1: dollars from TIA and other investors. And so performance, which

585
00:34:16,800 --> 00:34:18,640
Speaker 1: is kind of what I said earlier about you know,

586
00:34:19,120 --> 00:34:22,839
Speaker 1: performance attracts capital, right, So the lesser performers I think

587
00:34:22,880 --> 00:34:25,719
Speaker 1: struggled during COVID, and I'd say twenty twenty two is

588
00:34:25,719 --> 00:34:28,560
Speaker 1: the culmination of that, because not only did you have COVID,

589
00:34:28,920 --> 00:34:31,480
Speaker 1: but now you've got rising interest rates, and so if

590
00:34:31,480 --> 00:34:35,800
Speaker 1: you're financing marginal businesses, suddenly the cost of their loan.

591
00:34:36,120 --> 00:34:39,319
Speaker 1: The good news is our interest rate goes up. With

592
00:34:39,440 --> 00:34:42,560
Speaker 1: rising all of our loans are floating rate was gonna

593
00:34:43,040 --> 00:34:45,160
Speaker 1: no no good news for us. So let me jump

594
00:34:45,239 --> 00:34:47,600
Speaker 1: in and ask this. So prior to twenty twenty two,

595
00:34:48,239 --> 00:34:52,200
Speaker 1: we're effectively at zero, that's right, So how does the

596
00:34:53,239 --> 00:34:55,879
Speaker 1: my loans We're yielding six to seven percent, and then

597
00:34:55,920 --> 00:34:58,759
Speaker 1: what happens when rates go up to four? Loans today

598
00:34:58,800 --> 00:35:01,399
Speaker 1: are yielding eleven to twelve percent. So the very same

599
00:35:01,440 --> 00:35:03,680
Speaker 1: loan that we did a year ago at six to

600
00:35:03,680 --> 00:35:07,840
Speaker 1: seven percent is now yielding for our investors eleven to

601
00:35:07,880 --> 00:35:12,080
Speaker 1: twelve percent. So is it libor plus whatever the substitute.

602
00:35:12,080 --> 00:35:16,000
Speaker 1: That's exactly right, that's right, sofur right. So what we

603
00:35:16,040 --> 00:35:19,319
Speaker 1: saw was that not only did online base rates go

604
00:35:19,440 --> 00:35:23,120
Speaker 1: up about four hundred and fifty basis points maybe more today, right,

605
00:35:23,960 --> 00:35:28,120
Speaker 1: spreads widened and so that very same loan, a six

606
00:35:28,200 --> 00:35:31,759
Speaker 1: to seven percent loan today is yielding in our portfolio.

607
00:35:31,920 --> 00:35:34,960
Speaker 1: Reflects that our yield now is you know, eleven percent plus,

608
00:35:35,160 --> 00:35:40,680
Speaker 1: So better returns for our investors. Now. Conversely, you've got

609
00:35:40,680 --> 00:35:42,720
Speaker 1: to look at the companies and say, can they handle

610
00:35:43,160 --> 00:35:46,399
Speaker 1: you know, eleven percent interest? Right? Well, because we were

611
00:35:46,440 --> 00:35:49,359
Speaker 1: a very conservative lender, and because we were going into

612
00:35:49,440 --> 00:35:52,680
Speaker 1: transactions with very reasonable leverage. In fact, our average equity

613
00:35:52,719 --> 00:35:55,840
Speaker 1: and our transactions has been running about fifty five sixty

614
00:35:55,840 --> 00:36:01,920
Speaker 1: percent equity, right, so well capitalized, conservatives, structures, covenants, and

615
00:36:01,960 --> 00:36:04,960
Speaker 1: so the rise in rates has been beneficial to our investors,

616
00:36:04,960 --> 00:36:08,759
Speaker 1: but it is not caused broad based issues in our portfolio.

617
00:36:08,840 --> 00:36:12,960
Speaker 1: So we're sitting in a great place track record performance,

618
00:36:13,480 --> 00:36:17,800
Speaker 1: portfolio doing well, lots of liquidity, we continue to raise capital,

619
00:36:18,160 --> 00:36:22,600
Speaker 1: and investors institutions see that and as a result, gravitate

620
00:36:22,680 --> 00:36:27,440
Speaker 1: toward the better quality manager. So today, our yields on

621
00:36:27,520 --> 00:36:30,839
Speaker 1: our funds are, you know, at the highest levels they've

622
00:36:30,840 --> 00:36:34,879
Speaker 1: ever been in our history. Our portfolio remains in very

623
00:36:34,920 --> 00:36:38,400
Speaker 1: solid shape. We have a very very small number of

624
00:36:38,480 --> 00:36:41,959
Speaker 1: names even in our kind of watchless category, and we're

625
00:36:42,000 --> 00:36:44,200
Speaker 1: seeing interestingly enough, and this is I think a bit

626
00:36:44,239 --> 00:36:48,279
Speaker 1: of a surprise. The more challenged businesses are actually not

627
00:36:48,360 --> 00:36:50,360
Speaker 1: coming to market today. Right. If you've got a company

628
00:36:50,640 --> 00:36:53,400
Speaker 1: and they're struggling under their interest burden, or they're struggling

629
00:36:53,400 --> 00:36:56,520
Speaker 1: as a result of inability to pass on price increases

630
00:36:56,640 --> 00:36:59,799
Speaker 1: or problems with dealing with the rise and rates or

631
00:36:59,840 --> 00:37:02,920
Speaker 1: the consumer, they're probably not going to be businesses that

632
00:37:02,960 --> 00:37:06,399
Speaker 1: are being sold today. So the businesses that we are

633
00:37:06,440 --> 00:37:09,520
Speaker 1: seeing in our coming to market are higher quality, you know,

634
00:37:09,600 --> 00:37:13,040
Speaker 1: and so overall, you know, I would argue that the

635
00:37:13,239 --> 00:37:16,880
Speaker 1: current environment for us is really a golden age for

636
00:37:16,960 --> 00:37:21,440
Speaker 1: our ability to lend to quality businesses. By the way,

637
00:37:21,480 --> 00:37:24,120
Speaker 1: with lower leverage, right, because you can't lever it, you

638
00:37:24,160 --> 00:37:26,880
Speaker 1: can't lend it six times leverage today when rates are

639
00:37:26,880 --> 00:37:30,280
Speaker 1: eleven percent versus six. Right, So now leverage is lower,

640
00:37:30,960 --> 00:37:34,239
Speaker 1: covenants are more in favor of lenders like ourselves, and

641
00:37:34,280 --> 00:37:37,359
Speaker 1: I think, frankly, what we're seeing play out today in

642
00:37:37,400 --> 00:37:41,640
Speaker 1: the banking industry will only enhance that dynamic. Right, So

643
00:37:41,719 --> 00:37:44,600
Speaker 1: let's talk a little bit about the types of businesses

644
00:37:44,640 --> 00:37:48,000
Speaker 1: you're lending to. You said no restaurants, no retail, no

645
00:37:48,160 --> 00:37:53,719
Speaker 1: oil and gas. So anything that's either very volatile or

646
00:37:53,920 --> 00:37:57,920
Speaker 1: very specific like a good restaurant is a great business,

647
00:37:58,080 --> 00:38:01,800
Speaker 1: but as an industry, it's a razor thin margin, difficult

648
00:38:01,840 --> 00:38:05,319
Speaker 1: business with high turnover. What sort of businesses do you like?

649
00:38:05,400 --> 00:38:09,320
Speaker 1: Where do you follow? Sure? So we like market leading businesses.

650
00:38:09,360 --> 00:38:12,480
Speaker 1: So we like businesses that are in their niche a

651
00:38:12,640 --> 00:38:16,240
Speaker 1: you know, one or two player in terms of their business.

652
00:38:16,320 --> 00:38:18,640
Speaker 1: We like businesses that are really what I would call

653
00:38:18,680 --> 00:38:21,759
Speaker 1: traditional side middle market companies. So what does that really mean?

654
00:38:22,120 --> 00:38:25,760
Speaker 1: You know, we don't like the micro companies, right, companies

655
00:38:25,800 --> 00:38:27,920
Speaker 1: with you know, three four million dollars a year in

656
00:38:27,960 --> 00:38:31,239
Speaker 1: cash flow. Frankly, we saw in the GFC those businesses

657
00:38:31,280 --> 00:38:35,440
Speaker 1: were much more heavily impacted, right, So we want businesses

658
00:38:35,440 --> 00:38:40,040
Speaker 1: that are typically you know, fifty million to one hundred

659
00:38:40,040 --> 00:38:42,600
Speaker 1: million in cash flow maybe as small as twenty five million,

660
00:38:42,920 --> 00:38:48,839
Speaker 1: but but significant companies, market leaders in industries and with

661
00:38:49,000 --> 00:38:53,040
Speaker 1: demonstrated track records of strong historical growth. So what do

662
00:38:53,080 --> 00:38:57,080
Speaker 1: we mean by that? So software is a service business, right, So,

663
00:38:57,360 --> 00:39:03,279
Speaker 1: for example, a business that providesides software to banks or

664
00:39:03,560 --> 00:39:08,200
Speaker 1: to manufacturing companies where the software is actually embedded in

665
00:39:08,280 --> 00:39:13,480
Speaker 1: the business, right, highly unlikely to switch providers. Subscription subscription

666
00:39:13,560 --> 00:39:16,759
Speaker 1: model correct, by the way, not revenue based cash flow base.

667
00:39:16,840 --> 00:39:19,520
Speaker 1: No words, We're not lending to kind of pine this guy,

668
00:39:19,600 --> 00:39:23,680
Speaker 1: venture capital businesses. We're financing real companies that are the

669
00:39:23,800 --> 00:39:29,520
Speaker 1: lifeblood of the US economy. Healthcare. We're major financing provider

670
00:39:29,600 --> 00:39:33,200
Speaker 1: to healthcare businesses. Right. We financed, as an example, m

671
00:39:34,160 --> 00:39:39,799
Speaker 1: orthopedic practice build up, a large scale practice that is

672
00:39:39,840 --> 00:39:44,239
Speaker 1: providing healthcare services to you know, individuals and is a

673
00:39:44,360 --> 00:39:47,319
Speaker 1: leading practice in the in the New York area. We

674
00:39:47,440 --> 00:39:51,480
Speaker 1: financed that business. We financed us. You mentioned software um

675
00:39:51,640 --> 00:39:54,080
Speaker 1: a firm called Diligent. We have been a financing partner

676
00:39:54,080 --> 00:39:56,799
Speaker 1: of them for years. So you know, they're used to

677
00:39:56,880 --> 00:40:04,120
Speaker 1: keep information secure for boards and endowments and other public

678
00:40:04,200 --> 00:40:10,200
Speaker 1: and private investment boards. Optical scanning secure information ability to

679
00:40:10,280 --> 00:40:12,319
Speaker 1: update in a regular basis. You have a board meeting,

680
00:40:12,400 --> 00:40:14,840
Speaker 1: you want to update the materials. Five minutes before the meeting.

681
00:40:15,239 --> 00:40:17,400
Speaker 1: You downloaded that into their site, and so they are

682
00:40:17,400 --> 00:40:21,840
Speaker 1: the leader in that space. So market leaders recurring revenue,

683
00:40:21,840 --> 00:40:30,840
Speaker 1: recurring cash flow, information services, software, healthcare, distribution, logistics, business services.

684
00:40:30,840 --> 00:40:34,880
Speaker 1: But away from businesses that are very volatile, right, because

685
00:40:35,280 --> 00:40:41,120
Speaker 1: volatility brings all sorts of challenges, liquidity issues, issues with

686
00:40:41,160 --> 00:40:45,840
Speaker 1: respect to wiping out underlying equity value, or businesses that, frankly,

687
00:40:46,120 --> 00:40:48,840
Speaker 1: we could be completely right on the credit but wrong

688
00:40:48,920 --> 00:40:52,720
Speaker 1: on the commodity. Right. Oil goes up, going gas businesses

689
00:40:52,800 --> 00:40:55,520
Speaker 1: do well, it goes down. It takes everybody down, right,

690
00:40:55,760 --> 00:40:58,080
Speaker 1: So we like businesses where we can do our homework.

691
00:40:58,360 --> 00:41:01,880
Speaker 1: We can finance strong management teams backed by leading private

692
00:41:01,880 --> 00:41:04,400
Speaker 1: equity firms, and that's where we've been for our history.

693
00:41:04,480 --> 00:41:08,799
Speaker 1: So let's talk about those management teams. Once you make

694
00:41:09,320 --> 00:41:13,719
Speaker 1: either a credit or an equity or both investment into

695
00:41:13,760 --> 00:41:17,239
Speaker 1: a company, how closely do you stay involved with the

696
00:41:17,280 --> 00:41:20,359
Speaker 1: management team once the deal? You know, once the ink

697
00:41:20,440 --> 00:41:23,080
Speaker 1: has dried, do you stay involved or is it arms

698
00:41:23,160 --> 00:41:26,719
Speaker 1: length of them? Very very involved, And I think that's

699
00:41:26,760 --> 00:41:29,120
Speaker 1: that is in many respects and buy product of the

700
00:41:29,160 --> 00:41:32,960
Speaker 1: private equity business today, which has changed dramatically. So you know,

701
00:41:32,960 --> 00:41:35,279
Speaker 1: when you think about very you know, twenty twenty five

702
00:41:35,360 --> 00:41:38,760
Speaker 1: years ago, you know, private equity firms were buying businesses,

703
00:41:38,760 --> 00:41:41,880
Speaker 1: putting up ten percent equity, you know, buying companies for

704
00:41:42,040 --> 00:41:44,840
Speaker 1: you know, six seven, eight times cash flow and really

705
00:41:44,840 --> 00:41:48,960
Speaker 1: looking at cut costs and and and um and flip

706
00:41:49,040 --> 00:41:51,840
Speaker 1: those businesses a few years later. That's not the business today.

707
00:41:52,280 --> 00:41:56,440
Speaker 1: What we see in private equity today is really private

708
00:41:56,480 --> 00:42:02,040
Speaker 1: investment firms buying and growing businesses, creating value through growth

709
00:42:02,400 --> 00:42:05,880
Speaker 1: through acquiring smaller players. I look at a company like Diligent.

710
00:42:05,920 --> 00:42:09,520
Speaker 1: When we first financed that business, it was doing twenty

711
00:42:09,520 --> 00:42:11,440
Speaker 1: million a year in cash flow. It's doing you know,

712
00:42:11,480 --> 00:42:15,200
Speaker 1: two hundred plus million cash today. So the model today

713
00:42:15,719 --> 00:42:18,920
Speaker 1: is a growth model, and with that growth comes a

714
00:42:19,040 --> 00:42:23,359
Speaker 1: much closer relationship with the lender. So in most of

715
00:42:23,360 --> 00:42:26,880
Speaker 1: our deals today, the private equity firm that's buying the

716
00:42:26,920 --> 00:42:30,400
Speaker 1: business is already talking to us about the next acquisition,

717
00:42:30,440 --> 00:42:34,440
Speaker 1: the next opportunity, the next geographic expansion. So what they're

718
00:42:34,520 --> 00:42:37,399
Speaker 1: bringing to the table really is equity and looking for

719
00:42:37,520 --> 00:42:41,239
Speaker 1: us to be a full scale partner. Of theirs providing

720
00:42:41,239 --> 00:42:44,439
Speaker 1: that financing. And so the model, if you will, isn't

721
00:42:44,480 --> 00:42:46,680
Speaker 1: just oh, we lend money these guys when we walk

722
00:42:46,719 --> 00:42:48,719
Speaker 1: away and we hope they don't breach a covenant. The

723
00:42:48,760 --> 00:42:51,759
Speaker 1: model today is no, no, no no, no, we're buying off

724
00:42:51,920 --> 00:42:55,520
Speaker 1: on the strategy of growth. How can we be a

725
00:42:55,239 --> 00:42:58,960
Speaker 1: you know, an important and very strategic partner of that

726
00:42:59,080 --> 00:43:02,080
Speaker 1: private investment for as they grow the business. And I'll

727
00:43:02,080 --> 00:43:05,399
Speaker 1: give an example. At the time of our financing, our

728
00:43:05,440 --> 00:43:08,279
Speaker 1: average company is about forty to fifty million cash flow.

729
00:43:08,760 --> 00:43:12,239
Speaker 1: Yet our portfolio today, you know, obviously several years on

730
00:43:12,400 --> 00:43:15,279
Speaker 1: from when we finance the original deal, our portfolio today

731
00:43:15,320 --> 00:43:19,560
Speaker 1: is approaching seventy million in average cash flow of a business.

732
00:43:19,600 --> 00:43:24,680
Speaker 1: So signific growth in the underlying portfolio companies, because those

733
00:43:24,719 --> 00:43:27,680
Speaker 1: private equity firms see their role is really driving that

734
00:43:27,800 --> 00:43:30,080
Speaker 1: growth in Our role obviously is to be a good

735
00:43:30,080 --> 00:43:33,040
Speaker 1: partner for them. So on the one end of the spectrum,

736
00:43:33,080 --> 00:43:36,120
Speaker 1: a bank makes a loan and they hope it dozens

737
00:43:36,120 --> 00:43:39,280
Speaker 1: of faults. On the other end of the spectrum, private

738
00:43:39,320 --> 00:43:45,960
Speaker 1: equity companies accumulate a portfolio of separate companies that they're running.

739
00:43:46,200 --> 00:43:52,120
Speaker 1: They have thousands of employees, you seem to straddle the

740
00:43:52,239 --> 00:43:54,240
Speaker 1: two of them. You have a foot in each camp.

741
00:43:54,520 --> 00:43:58,520
Speaker 1: You're making loans, you're providing equity investments, but you're not

742
00:43:58,719 --> 00:44:02,919
Speaker 1: accumulating folio companies the way pe farms. Well interestingly, so

743
00:44:03,040 --> 00:44:06,280
Speaker 1: here's the angle and the difference between us and virtually

744
00:44:06,320 --> 00:44:09,040
Speaker 1: any of our peers. If you look at most of

745
00:44:09,080 --> 00:44:12,600
Speaker 1: our peers in private credit, certainly the large ones, they

746
00:44:12,640 --> 00:44:16,279
Speaker 1: all have their own dedicated private equity arms. Right. So

747
00:44:16,320 --> 00:44:19,799
Speaker 1: if you look at the publicly traded asset managers, they

748
00:44:19,800 --> 00:44:22,320
Speaker 1: have private credit, but then they also have a control

749
00:44:22,480 --> 00:44:25,560
Speaker 1: private equity arm that actually does deals. Right. So in

750
00:44:25,600 --> 00:44:28,920
Speaker 1: some respects you could argue competing against themselves a little bit, right.

751
00:44:28,960 --> 00:44:33,000
Speaker 1: I mean they're buying companies, but then they're financing in

752
00:44:33,080 --> 00:44:36,040
Speaker 1: large private equity firms that are competing to buy those

753
00:44:36,120 --> 00:44:40,640
Speaker 1: very same companies, right, Not always, but occasionally. In our case,

754
00:44:41,200 --> 00:44:43,839
Speaker 1: we don't have a control private equity business, right. Our

755
00:44:43,880 --> 00:44:47,799
Speaker 1: private equity business is partner oriented, and it starts with

756
00:44:47,840 --> 00:44:52,840
Speaker 1: the fact that we have investments in over two hundred

757
00:44:52,880 --> 00:44:57,600
Speaker 1: and seventy mid market private equity funds, Right, So what

758
00:44:57,640 --> 00:45:00,640
Speaker 1: does that do for us? It gives us tremendou insight

759
00:45:01,320 --> 00:45:05,200
Speaker 1: into their performance, right, and so we do all that research.

760
00:45:05,880 --> 00:45:09,200
Speaker 1: We understand their focus. We obviously see what industries they

761
00:45:09,200 --> 00:45:13,000
Speaker 1: invest in, understand we see their rrs, their returns they generate.

762
00:45:13,480 --> 00:45:16,160
Speaker 1: We invest with the best, and then we look to

763
00:45:16,200 --> 00:45:19,720
Speaker 1: do other things with them. Right. So we're a limited partner.

764
00:45:20,520 --> 00:45:22,400
Speaker 1: We may co invest in the equity and some of

765
00:45:22,400 --> 00:45:27,239
Speaker 1: those deals, but equally as important, we now understand the firm.

766
00:45:27,280 --> 00:45:30,200
Speaker 1: We have an ongoing relationship. We sit on the advisory

767
00:45:30,200 --> 00:45:33,360
Speaker 1: board today of two hundred US private equity firms, so

768
00:45:33,400 --> 00:45:35,960
Speaker 1: on their advisory board. Let's drill into that a little bit.

769
00:45:36,040 --> 00:45:38,160
Speaker 1: When you say you're a limited partner, I think of

770
00:45:38,280 --> 00:45:42,600
Speaker 1: LPs as Oh, here's a Carlisle fun twenty seven, Right,

771
00:45:42,880 --> 00:45:45,400
Speaker 1: I give you X dollars. I'm an LP. That what

772
00:45:45,520 --> 00:45:50,120
Speaker 1: you're describing sounds like a much tighter relationship where you're

773
00:45:50,160 --> 00:45:53,520
Speaker 1: co investing in a specific project. That's right, not just

774
00:45:53,600 --> 00:45:55,560
Speaker 1: handing off dollars to a fund. That's exactly right. We

775
00:45:55,600 --> 00:45:58,719
Speaker 1: have a separate team that does that, right. So they

776
00:45:58,880 --> 00:46:03,120
Speaker 1: are managing our investments in private equity firms and co

777
00:46:03,320 --> 00:46:07,839
Speaker 1: investing in those deals, and part of their goal is

778
00:46:07,880 --> 00:46:12,080
Speaker 1: to assist the lending side and understanding who's doing it

779
00:46:12,120 --> 00:46:15,400
Speaker 1: the best, what industries are they doing it, and ultimately

780
00:46:15,440 --> 00:46:18,080
Speaker 1: making sure that we're connected on the lending side with

781
00:46:18,120 --> 00:46:20,000
Speaker 1: how we can finance their deals. I was about to

782
00:46:20,000 --> 00:46:22,319
Speaker 1: say that sounds like it's really good for deal flow.

783
00:46:22,480 --> 00:46:25,359
Speaker 1: It's really good for deal flow. And in fact, what

784
00:46:25,400 --> 00:46:27,919
Speaker 1: we're seeing in the current environment is that those two

785
00:46:28,040 --> 00:46:30,480
Speaker 1: hundred and seventy private equity funds where we're a limited

786
00:46:30,520 --> 00:46:35,080
Speaker 1: partner and sit on their advisory boards, are increasingly consolidating

787
00:46:35,080 --> 00:46:38,120
Speaker 1: their lending relationships, right because they're saying, you know what,

788
00:46:38,760 --> 00:46:40,680
Speaker 1: we want to go to partners that when we bring

789
00:46:40,680 --> 00:46:43,399
Speaker 1: a deal to them, we know they're going to be there, right,

790
00:46:43,719 --> 00:46:47,440
Speaker 1: And if you've financed twenty thirty forty fifty deals with

791
00:46:47,520 --> 00:46:49,920
Speaker 1: that firm over the past twenty years. As we have,

792
00:46:50,520 --> 00:46:53,799
Speaker 1: we've become in many respects, the go to partner of

793
00:46:53,960 --> 00:46:56,319
Speaker 1: many many of these private equity firms now. And it's

794
00:46:56,360 --> 00:46:58,360
Speaker 1: a huge advantage, right because if you think about it,

795
00:46:58,360 --> 00:47:00,520
Speaker 1: if you're a private equity fund and you're try to

796
00:47:00,520 --> 00:47:04,160
Speaker 1: buy a transaction, you're competing to buy a business, right

797
00:47:04,400 --> 00:47:07,200
Speaker 1: and you need financing, you need committed financing. Are you

798
00:47:07,239 --> 00:47:09,880
Speaker 1: going to go to a firm that has done thirty

799
00:47:09,920 --> 00:47:12,920
Speaker 1: deals with you over the last twenty years, and you

800
00:47:12,960 --> 00:47:15,000
Speaker 1: know is going to be there or are you going

801
00:47:15,040 --> 00:47:17,520
Speaker 1: to try a new guy? Right, You're gonna go where

802
00:47:17,600 --> 00:47:19,719
Speaker 1: you've got a relationship and you've got a history. So

803
00:47:20,040 --> 00:47:24,000
Speaker 1: let's talk about that. Because I have a limited amount

804
00:47:24,000 --> 00:47:28,239
Speaker 1: of experience with a couple of different firms doing the

805
00:47:28,320 --> 00:47:30,520
Speaker 1: sort of stuff. And one of the things I found

806
00:47:30,520 --> 00:47:34,080
Speaker 1: fascinated and I won't mention any names, but every household

807
00:47:34,160 --> 00:47:37,000
Speaker 1: names that everybody knows, and one of the deals that

808
00:47:37,040 --> 00:47:41,680
Speaker 1: we did, I just came away thinking every interaction with

809
00:47:41,719 --> 00:47:46,080
Speaker 1: these people has been fantastic. Everybody at everyone, every level

810
00:47:46,280 --> 00:47:49,000
Speaker 1: is a rock star. Hey, we're looking for a buyer,

811
00:47:49,040 --> 00:47:51,560
Speaker 1: we're looking for seller. Everybody comes together with the same

812
00:47:51,600 --> 00:47:54,920
Speaker 1: objective in mind and it happens, and I'm like, wow,

813
00:47:54,960 --> 00:47:59,200
Speaker 1: that was really a delight to deal with. I have

814
00:47:59,320 --> 00:48:03,480
Speaker 1: to think when you have these long term relationships, it's personal.

815
00:48:03,600 --> 00:48:07,200
Speaker 1: There's a ton of trust. It's not every step along

816
00:48:07,200 --> 00:48:08,600
Speaker 1: the way. All right, let's bring on the team of

817
00:48:08,680 --> 00:48:11,839
Speaker 1: lawyers to fight over commas. It's right, we know who

818
00:48:11,840 --> 00:48:14,799
Speaker 1: you are, you know who we are. Let's make this happen. Well,

819
00:48:14,840 --> 00:48:19,160
Speaker 1: if you think about it, if we've financed thirty deals,

820
00:48:19,200 --> 00:48:22,879
Speaker 1: as we have with many leading private equity firms, we

821
00:48:22,960 --> 00:48:25,799
Speaker 1: start out on the five yard line, right. Words, we've

822
00:48:25,840 --> 00:48:28,600
Speaker 1: done thirty documents with them, right, I mean, we don't

823
00:48:28,600 --> 00:48:32,720
Speaker 1: need to recreate the docs. Right. So we've got personal

824
00:48:32,800 --> 00:48:35,680
Speaker 1: chemistry and history, We've got a course of dealing where

825
00:48:35,719 --> 00:48:38,160
Speaker 1: we both know kind of we start with okay, we

826
00:48:38,280 --> 00:48:41,600
Speaker 1: just did your last deal. Let's let's start with that document, right.

827
00:48:41,640 --> 00:48:43,319
Speaker 1: So all of a sudden, we're at the ninety five

828
00:48:43,360 --> 00:48:46,239
Speaker 1: yard line, right, So, so a lot ability to move

829
00:48:46,320 --> 00:48:49,360
Speaker 1: much more quickly. Third, there's a level of trust. So

830
00:48:49,400 --> 00:48:52,439
Speaker 1: when we say that that private investment firm, we're good.

831
00:48:52,800 --> 00:48:55,879
Speaker 1: You know, we're issuing a commitment letter. We're good. They

832
00:48:55,920 --> 00:48:59,839
Speaker 1: know we're good, right, They know that after twenty years

833
00:48:59,880 --> 00:49:02,200
Speaker 1: of working with us, we're going to be there for them.

834
00:49:02,200 --> 00:49:04,879
Speaker 1: And oh, by the way, just one other element, we're

835
00:49:04,920 --> 00:49:07,840
Speaker 1: a limited partner in your fund, and our private equity

836
00:49:07,840 --> 00:49:10,440
Speaker 1: team sits on your advisory board. And oh, by the way,

837
00:49:10,440 --> 00:49:12,719
Speaker 1: we've got a long term connection with you guys. We're

838
00:49:12,920 --> 00:49:14,799
Speaker 1: you know, we're here for the longest. It seems very

839
00:49:14,800 --> 00:49:17,400
Speaker 1: comfortable for everybody involved. It is, and you know what,

840
00:49:17,760 --> 00:49:20,239
Speaker 1: that doesn't mean that we don't negotiate over terms and

841
00:49:20,280 --> 00:49:22,160
Speaker 1: we have to and they do too, But at the

842
00:49:22,239 --> 00:49:24,160
Speaker 1: end of the day, there's a level of respect and

843
00:49:24,200 --> 00:49:26,760
Speaker 1: trust that we're going to get there. We like the business,

844
00:49:26,800 --> 00:49:29,759
Speaker 1: it makes sense, and it's been a huge driver for

845
00:49:29,800 --> 00:49:31,680
Speaker 1: growth in our business. You know, I would venture to

846
00:49:31,719 --> 00:49:34,880
Speaker 1: say that there have been very few direct lending firms

847
00:49:35,560 --> 00:49:38,160
Speaker 1: like ourselves then in a relatively short period of time.

848
00:49:38,719 --> 00:49:40,759
Speaker 1: If you think about it's been seven years that we've

849
00:49:40,800 --> 00:49:44,800
Speaker 1: been part of TIAA, it'll be it'll be eight years. Actually,

850
00:49:44,800 --> 00:49:47,439
Speaker 1: are of an anniversaries coming up here. If you think

851
00:49:47,440 --> 00:49:50,240
Speaker 1: about how, you know, how we have grown this business.

852
00:49:50,640 --> 00:49:52,680
Speaker 1: You know, last year we were the second most active

853
00:49:52,719 --> 00:49:55,720
Speaker 1: direct lender in the United States. That's a relatively short

854
00:49:55,760 --> 00:49:57,640
Speaker 1: time When you look at every you know, look at

855
00:49:57,640 --> 00:50:00,600
Speaker 1: the firms that are around us, many of the have

856
00:50:00,640 --> 00:50:02,840
Speaker 1: been around for you know, as many as fifteen or

857
00:50:02,840 --> 00:50:05,480
Speaker 1: even twenty years. So in that sense, we've grown the

858
00:50:05,520 --> 00:50:09,120
Speaker 1: business quite significantly. And I'd be remissive I didn't. I

859
00:50:09,200 --> 00:50:11,520
Speaker 1: just got asked this question last week, so I think

860
00:50:11,640 --> 00:50:15,719
Speaker 1: this is important. So I was actually on speaking at

861
00:50:15,719 --> 00:50:19,520
Speaker 1: a conference to Greenwich Economic Forum last week, we are

862
00:50:19,640 --> 00:50:21,839
Speaker 1: your folks interviewed me. Actually so, I had a very

863
00:50:21,920 --> 00:50:26,040
Speaker 1: nice conversation, but I was asked the question, how does

864
00:50:26,040 --> 00:50:29,040
Speaker 1: that happen? How do you go from three hundred million

865
00:50:29,040 --> 00:50:31,880
Speaker 1: dollars from TIAA that they were only investor. We had

866
00:50:31,920 --> 00:50:36,200
Speaker 1: one investor eight years ago. We have nearly two thousand

867
00:50:36,239 --> 00:50:39,920
Speaker 1: investors today, including many many of the largest US pension

868
00:50:39,960 --> 00:50:44,000
Speaker 1: funds and sovereign wealth funds and internationally investors. And I

869
00:50:44,000 --> 00:50:47,920
Speaker 1: said three things. I said, Number one, it's all about

870
00:50:47,920 --> 00:50:52,479
Speaker 1: your people, and it's particularly all about the first ten

871
00:50:52,560 --> 00:50:57,160
Speaker 1: to twenty people you hire. If they are the right people,

872
00:50:57,680 --> 00:51:02,520
Speaker 1: and obviously technical capability, but also just culturally other right people,

873
00:51:03,200 --> 00:51:06,440
Speaker 1: they multiply like crazy, right, those are the people are

874
00:51:06,440 --> 00:51:09,360
Speaker 1: going to be running hiring, and they're going to be

875
00:51:09,400 --> 00:51:11,520
Speaker 1: hiring people. So next thing you go, you know, you

876
00:51:11,560 --> 00:51:15,120
Speaker 1: go from ten to fifteen twenty people. Suddenly we've got

877
00:51:15,120 --> 00:51:19,279
Speaker 1: fifty people. We were at fifty professionals when we went

878
00:51:19,320 --> 00:51:23,399
Speaker 1: into COVID. We're one hundred and fifty today. We were

879
00:51:23,400 --> 00:51:26,400
Speaker 1: managing six billion dollars when we hit COVID. We're managing

880
00:51:26,440 --> 00:51:30,879
Speaker 1: forty six billion dollars today. People, so Number one, It's

881
00:51:30,920 --> 00:51:33,360
Speaker 1: all about the people, and I'm so proud of the

882
00:51:33,400 --> 00:51:35,920
Speaker 1: team and the culture we've built. I mean, we literally

883
00:51:35,920 --> 00:51:38,239
Speaker 1: just had our offsite two weeks ago and you know,

884
00:51:38,280 --> 00:51:40,359
Speaker 1: I was practically crying. I couldn't believe what a great

885
00:51:40,360 --> 00:51:45,000
Speaker 1: team we've put together. Secondly, the partners you have. You know,

886
00:51:45,080 --> 00:51:49,480
Speaker 1: if you look at TIAA and Nuvene, they've been unbelievable partners.

887
00:51:49,560 --> 00:51:53,080
Speaker 1: Nuvine's raising money for us ta's investing their own capital

888
00:51:53,080 --> 00:51:58,239
Speaker 1: and obviously their their members capital. They've been incredible, unwavering supporters.

889
00:51:58,239 --> 00:52:00,640
Speaker 1: As I've mentioned, we managed twenty three billion dollars today

890
00:52:00,920 --> 00:52:04,200
Speaker 1: for tia and their participants, but also Nuvene has helped

891
00:52:04,280 --> 00:52:07,040
Speaker 1: raise capital and we wouldn't be here without them. And

892
00:52:07,080 --> 00:52:10,319
Speaker 1: then Jose obviously as the CEO, has really been an

893
00:52:10,320 --> 00:52:14,319
Speaker 1: incredible supporter. And then I would say it's at the

894
00:52:14,440 --> 00:52:18,160
Speaker 1: end of the day, it's also about recognizing that this

895
00:52:18,239 --> 00:52:20,480
Speaker 1: is never easy. I mean, you know this very right.

896
00:52:20,480 --> 00:52:23,240
Speaker 1: It looks so easy now, right, I tell other people's stories,

897
00:52:23,280 --> 00:52:26,319
Speaker 1: you know, like, oh, it looks so easy. Tom, it

898
00:52:26,360 --> 00:52:29,360
Speaker 1: was inevitable. I mean Tom Brady was drafting the fifth round,

899
00:52:29,400 --> 00:52:30,920
Speaker 1: and you know he was sitting on the bench in

900
00:52:30,960 --> 00:52:32,840
Speaker 1: New England and how does this happen? You know? And

901
00:52:32,920 --> 00:52:35,560
Speaker 1: I tell my kids this all the time. You have

902
00:52:35,680 --> 00:52:39,000
Speaker 1: to be willing to pay the price in tenacity and

903
00:52:39,040 --> 00:52:42,359
Speaker 1: a willingness to just keep you know, if I told

904
00:52:42,400 --> 00:52:44,920
Speaker 1: you how many times, not just me but all of

905
00:52:45,000 --> 00:52:47,759
Speaker 1: us who are really leaders in this space get got

906
00:52:47,800 --> 00:52:51,600
Speaker 1: turned down raising money, I mean, no, thank you very much,

907
00:52:51,719 --> 00:52:54,640
Speaker 1: come back later, no, thank you very much. Interesting, come

908
00:52:54,719 --> 00:52:57,560
Speaker 1: see us a year from now. So it's a willingness

909
00:52:57,600 --> 00:53:02,359
Speaker 1: to be incredibly tenacious and really not give up, you know.

910
00:53:02,400 --> 00:53:05,719
Speaker 1: And you know, I know that sounds kind of cliche like,

911
00:53:05,880 --> 00:53:08,000
Speaker 1: but it's cliche for a reason, but it's you know what,

912
00:53:08,520 --> 00:53:11,200
Speaker 1: it's really the truth. And you know, on the people front,

913
00:53:11,800 --> 00:53:17,480
Speaker 1: we've been very focused on really building a diversified, diversity,

914
00:53:17,560 --> 00:53:21,800
Speaker 1: diverse workforce. So today you know, nearly half our people

915
00:53:21,800 --> 00:53:25,960
Speaker 1: are women or ethnic minorities. Because it's good business. You

916
00:53:26,000 --> 00:53:28,920
Speaker 1: want diversity of a thought, you want diversity of backgrounds,

917
00:53:28,960 --> 00:53:31,840
Speaker 1: you want diversity of ideas. Right. I need somebody around

918
00:53:31,880 --> 00:53:34,440
Speaker 1: to tell me when I'm being a knucklehead. Right, And

919
00:53:34,520 --> 00:53:37,359
Speaker 1: sometimes you know, you can make wrong decisions, but it's

920
00:53:37,400 --> 00:53:40,680
Speaker 1: a lot, it's a lot harder to make a bad decision,

921
00:53:41,200 --> 00:53:43,520
Speaker 1: and there's a lot more of a defense mechanism if

922
00:53:43,520 --> 00:53:46,840
Speaker 1: you surround yourself with people who have diverse ideas and

923
00:53:46,880 --> 00:53:49,319
Speaker 1: diversity of thought and can say to you, you know what,

924
00:53:49,719 --> 00:53:52,719
Speaker 1: I've actually been in that situation, this is probably not

925
00:53:52,760 --> 00:53:57,279
Speaker 1: the right right decision. So listening, building in a very

926
00:53:57,280 --> 00:54:02,200
Speaker 1: diverse team, listening to them, and and and ultimately being

927
00:54:02,239 --> 00:54:05,200
Speaker 1: willing to change your mind when sometimes you don't have

928
00:54:05,239 --> 00:54:07,160
Speaker 1: all the answers and you need to, you know, you

929
00:54:07,239 --> 00:54:09,560
Speaker 1: need to rely on folks that you know can really

930
00:54:09,600 --> 00:54:12,719
Speaker 1: bring value. So I'm very humbled by that. And it's

931
00:54:12,719 --> 00:54:16,680
Speaker 1: been a great run. So let's talk about the experience

932
00:54:16,719 --> 00:54:20,720
Speaker 1: you've had in the industry, working with lots and lots

933
00:54:20,719 --> 00:54:26,480
Speaker 1: of different companies, some not so successful, some incredibly successful.

934
00:54:27,360 --> 00:54:30,120
Speaker 1: When you look at the landscape out there, what's the

935
00:54:30,160 --> 00:54:34,480
Speaker 1: difference between the rockstar firms that are killing it and

936
00:54:34,520 --> 00:54:37,239
Speaker 1: the also runs who just seem to be bogged down

937
00:54:37,239 --> 00:54:40,759
Speaker 1: in bureaucracy and can't get out of their own way. Yeah, now,

938
00:54:40,760 --> 00:54:43,840
Speaker 1: and I think it's a it's a great question. And

939
00:54:43,840 --> 00:54:45,640
Speaker 1: and you know, obviously I've had a front row seat

940
00:54:45,680 --> 00:54:49,320
Speaker 1: to lots of different institutions and certainly my own as well.

941
00:54:49,719 --> 00:54:51,840
Speaker 1: And I think in the final analysis that you know,

942
00:54:51,880 --> 00:54:55,000
Speaker 1: I mentioned people, but it's even even more than that,

943
00:54:55,040 --> 00:54:59,319
Speaker 1: in a very important way. It's ultimately about leadership. Right

944
00:54:59,680 --> 00:55:04,160
Speaker 1: if if the leadership of an organization empowers their people,

945
00:55:04,800 --> 00:55:08,319
Speaker 1: puts their people in a position to succeed, and understands

946
00:55:08,360 --> 00:55:10,080
Speaker 1: that at the end of the day, you know, their

947
00:55:10,160 --> 00:55:13,279
Speaker 1: job is not to micro manage people. Their job is

948
00:55:13,320 --> 00:55:16,240
Speaker 1: to set their people free and make sure that they're

949
00:55:16,280 --> 00:55:18,319
Speaker 1: you know, in a word, kind of bulldozing all the

950
00:55:18,360 --> 00:55:21,680
Speaker 1: barriers away. Right, that that's my job at the end

951
00:55:21,719 --> 00:55:23,920
Speaker 1: of the day, and you approach it with a sense

952
00:55:23,960 --> 00:55:27,560
Speaker 1: of humility and certainly a lot of passion. But at

953
00:55:27,560 --> 00:55:30,759
Speaker 1: the end of the day, as I mentioned earlier, having

954
00:55:30,880 --> 00:55:33,760
Speaker 1: hired what I view are the best team in the industry,

955
00:55:34,120 --> 00:55:37,200
Speaker 1: you now have to empower the best team in the industry,

956
00:55:37,320 --> 00:55:39,840
Speaker 1: and you have to mentor the best team in the industry.

957
00:55:39,960 --> 00:55:43,520
Speaker 1: And I look across the organization, it's all about, at

958
00:55:43,520 --> 00:55:47,120
Speaker 1: the end of the day, providing that leadership in support

959
00:55:47,160 --> 00:55:50,200
Speaker 1: and so the best organizations and I certainly try to

960
00:55:50,840 --> 00:55:53,840
Speaker 1: do my best to to to emulate this are really

961
00:55:53,920 --> 00:55:59,760
Speaker 1: all about leadership. That is, in many respects, a servant leader.

962
00:56:00,080 --> 00:56:03,920
Speaker 1: That's what I believe, leader, servant leader. I believe my

963
00:56:04,080 --> 00:56:08,240
Speaker 1: job is to serve my people and to make sure

964
00:56:08,400 --> 00:56:12,000
Speaker 1: that they are able to do their absolute best at

965
00:56:12,040 --> 00:56:15,200
Speaker 1: their job, not to create bearers or not to micro

966
00:56:15,360 --> 00:56:18,680
Speaker 1: manage them, but to empower them and to knock those

967
00:56:18,719 --> 00:56:21,200
Speaker 1: barriers down and to put them in a position where

968
00:56:21,200 --> 00:56:24,440
Speaker 1: they can be successful. You are not the first CEO

969
00:56:24,520 --> 00:56:27,400
Speaker 1: who has said that to me. I've heard similar things

970
00:56:27,760 --> 00:56:31,520
Speaker 1: from other folks, and these are all very successful companies.

971
00:56:31,520 --> 00:56:35,920
Speaker 1: So I assume there's something to that. Well, you know it.

972
00:56:36,040 --> 00:56:39,359
Speaker 1: In many respects, it gets it gets back to you know,

973
00:56:40,040 --> 00:56:45,359
Speaker 1: my background, which is quite unique, and I think, um,

974
00:56:45,400 --> 00:56:49,760
Speaker 1: so let's talk about that. What makes your background so unique? Well,

975
00:56:50,239 --> 00:56:54,040
Speaker 1: it's probably the most unique background of of any anyone

976
00:56:54,080 --> 00:56:57,120
Speaker 1: you've you've interviewed in a while. Um, there's one other

977
00:56:57,280 --> 00:57:01,359
Speaker 1: Okrison who has a similar background. But tell us so.

978
00:57:01,640 --> 00:57:05,640
Speaker 1: I was born in Buffalo, New York. I was left

979
00:57:06,480 --> 00:57:09,400
Speaker 1: for ultimately for adoption when when I was born, But

980
00:57:09,440 --> 00:57:12,879
Speaker 1: I was basically left at the hospital. I was, by

981
00:57:12,880 --> 00:57:15,560
Speaker 1: the way, unclear whether I was actually gonna make it,

982
00:57:15,600 --> 00:57:17,760
Speaker 1: so I was put on I was put in a

983
00:57:17,920 --> 00:57:20,720
Speaker 1: life support and an incubator and lots of other stuff. Anyway,

984
00:57:20,760 --> 00:57:24,160
Speaker 1: long story short, I did obviously I'm here, um, but

985
00:57:24,240 --> 00:57:29,520
Speaker 1: I was adopted by a couple that you know, luck

986
00:57:29,560 --> 00:57:32,720
Speaker 1: would have it. Both my father and mother died when

987
00:57:32,720 --> 00:57:37,000
Speaker 1: I was quite young. And so I my mother, my

988
00:57:37,040 --> 00:57:41,640
Speaker 1: mother's brother, or my my uncle raised his hand and said,

989
00:57:41,960 --> 00:57:44,480
Speaker 1: you know I can do this. You know I'll step

990
00:57:44,520 --> 00:57:47,360
Speaker 1: in for my sister because as he's an only child.

991
00:57:47,400 --> 00:57:50,160
Speaker 1: And you know, um, I grew up in a pretty

992
00:57:51,080 --> 00:57:56,760
Speaker 1: ramshackle part of Buffalo called Woodlawn, Um, and Um, Ultimately

993
00:57:56,960 --> 00:58:00,400
Speaker 1: my uncle became my guardian. It took him well over

994
00:58:00,400 --> 00:58:04,240
Speaker 1: a year. He never graduated from high school. He worked

995
00:58:04,280 --> 00:58:06,880
Speaker 1: in the steel plant. We actually lived across the street

996
00:58:07,800 --> 00:58:12,880
Speaker 1: from the Bethlehem Steel where he worked. But he changed

997
00:58:12,920 --> 00:58:15,680
Speaker 1: everything in my life. And what he changed is he

998
00:58:15,720 --> 00:58:19,080
Speaker 1: had a tremendous amount of humility. And you know, always

999
00:58:19,080 --> 00:58:21,800
Speaker 1: taught me growing up that you know, it's not about you,

1000
00:58:22,400 --> 00:58:26,160
Speaker 1: it's about how you can influence and change other people's lives.

1001
00:58:26,480 --> 00:58:29,680
Speaker 1: And so I've always had that focus. And so he

1002
00:58:29,760 --> 00:58:33,400
Speaker 1: sent me to an all boys Jesuit high school called Canisius.

1003
00:58:34,080 --> 00:58:36,400
Speaker 1: The Jesuits kind of got behind the program and sent

1004
00:58:36,440 --> 00:58:41,960
Speaker 1: me to a Jesuit high school Georgetown University. And in

1005
00:58:42,000 --> 00:58:47,680
Speaker 1: my career, I've always tried to dedicate myself to making

1006
00:58:47,920 --> 00:58:50,720
Speaker 1: everyone around me better. So let's let's focus on that.

1007
00:58:50,760 --> 00:58:53,720
Speaker 1: Because you said something earlier that I let slip by,

1008
00:58:53,760 --> 00:58:58,840
Speaker 1: but I want to address, especially given the growth the

1009
00:58:58,880 --> 00:59:02,080
Speaker 1: pharmacy and over the past couple of years, you mentioned

1010
00:59:02,120 --> 00:59:05,320
Speaker 1: the first ten or twenty HighRes you make are the

1011
00:59:05,360 --> 00:59:09,280
Speaker 1: most important HighRes. Tell us why what happens to those

1012
00:59:09,320 --> 00:59:13,240
Speaker 1: first twenty people as a firm grows to one hundred,

1013
00:59:13,240 --> 00:59:16,280
Speaker 1: one hundred and fifty employees. It's very interesting, you know.

1014
00:59:16,320 --> 00:59:18,800
Speaker 1: And I interviewed all of them, every single one of them.

1015
00:59:19,160 --> 00:59:20,680
Speaker 1: One of them is here in the studio with us

1016
00:59:20,720 --> 00:59:24,960
Speaker 1: today and Jessica tan Obama, who heads up our marketing

1017
00:59:24,960 --> 00:59:28,560
Speaker 1: area in Communications, and at the end of the day,

1018
00:59:29,160 --> 00:59:32,200
Speaker 1: you see something and you know it when you see

1019
00:59:32,200 --> 00:59:37,880
Speaker 1: it's it's a level of passion and enthusiasm. Obviously, all

1020
00:59:37,920 --> 00:59:42,360
Speaker 1: of the boxes are checked right, experience, background, knowledge, understanding

1021
00:59:42,360 --> 00:59:45,200
Speaker 1: of the job, etc. But there's something else, And I

1022
00:59:45,240 --> 00:59:49,600
Speaker 1: would say that something else is in an outward facing

1023
00:59:50,120 --> 00:59:54,919
Speaker 1: dynamic where they are clearly incredibly passionate about what they do,

1024
00:59:55,320 --> 01:00:00,400
Speaker 1: but also that enthusiasm and passion isn't infectious, and and

1025
01:00:00,520 --> 01:00:04,560
Speaker 1: they recruit people just like them, and suddenly you know,

1026
01:00:04,640 --> 01:00:06,640
Speaker 1: you instead of you know, you have a core group

1027
01:00:06,680 --> 01:00:09,400
Speaker 1: that maybe ten, fifteen, twenty people you know. And I'm

1028
01:00:09,440 --> 01:00:12,480
Speaker 1: sure this is probably similar with other firms like this.

1029
01:00:12,600 --> 01:00:14,640
Speaker 1: I mean, if you look at you know, Bloomberg, I'm

1030
01:00:14,640 --> 01:00:16,280
Speaker 1: sure it was you know, Mike and three guys in

1031
01:00:16,280 --> 01:00:18,280
Speaker 1: a conference room when they got started, right, but it

1032
01:00:18,320 --> 01:00:20,560
Speaker 1: was the right three or the right ten, right. And

1033
01:00:20,640 --> 01:00:22,680
Speaker 1: you look at you know, you look at firms you

1034
01:00:22,720 --> 01:00:25,120
Speaker 1: know in the asset management industry, and the similar the

1035
01:00:25,160 --> 01:00:28,280
Speaker 1: stories in many respects very similar. So you know, you

1036
01:00:28,360 --> 01:00:34,360
Speaker 1: want you want individuals that are UM outwardly focused, focusing

1037
01:00:34,400 --> 01:00:38,160
Speaker 1: on building a team of incredibly talented people and understand

1038
01:00:38,160 --> 01:00:41,160
Speaker 1: that it's really important to act as a mentor and

1039
01:00:41,280 --> 01:00:47,040
Speaker 1: a coach and ultimately a cheerleader and a provider of UM,

1040
01:00:47,160 --> 01:00:50,640
Speaker 1: you know, opportunity to really grow in their career and

1041
01:00:50,680 --> 01:00:54,160
Speaker 1: their UM in their in their jobs. And what's fascinating

1042
01:00:54,160 --> 01:00:57,200
Speaker 1: about us is we've had virtually no turnover over the

1043
01:00:57,320 --> 01:01:00,400
Speaker 1: last several years, all through COVID, and I think that

1044
01:01:00,480 --> 01:01:02,400
Speaker 1: you know, that's a mark of an organization that has

1045
01:01:02,440 --> 01:01:06,120
Speaker 1: tremendous stability. And you know, I walk around all the

1046
01:01:06,160 --> 01:01:08,640
Speaker 1: time and I'm talking to everyone, you know, literally. I

1047
01:01:08,640 --> 01:01:10,600
Speaker 1: think my people get sick of me walking around because

1048
01:01:10,640 --> 01:01:13,160
Speaker 1: I'm literally walking around. But I think it's really important

1049
01:01:13,200 --> 01:01:15,280
Speaker 1: to let them know you care and that you know

1050
01:01:15,440 --> 01:01:18,840
Speaker 1: they feel that, and then they thrive on that passion.

1051
01:01:19,000 --> 01:01:22,120
Speaker 1: So I've I've had a number of CEOs I've either

1052
01:01:22,280 --> 01:01:24,640
Speaker 1: have them tell me this on the show or I've

1053
01:01:24,640 --> 01:01:28,640
Speaker 1: read it elsewhere that I've all said, hiring is not

1054
01:01:28,720 --> 01:01:31,880
Speaker 1: only the most important part of our job, it's the

1055
01:01:31,960 --> 01:01:35,000
Speaker 1: single most difficult thing we do. Do you agree with that?

1056
01:01:36,440 --> 01:01:40,440
Speaker 1: What makes it so challenging? And how can we do

1057
01:01:40,480 --> 01:01:43,920
Speaker 1: it well or better? I think that, first of all,

1058
01:01:43,960 --> 01:01:46,320
Speaker 1: it is absolutely the most it's the most important part

1059
01:01:46,360 --> 01:01:48,920
Speaker 1: of your job, but it's also the hardest, right because

1060
01:01:48,960 --> 01:01:51,120
Speaker 1: you have a half an hour or forty five minutes

1061
01:01:51,520 --> 01:01:53,919
Speaker 1: and you're trying to assess whether this person is really

1062
01:01:53,920 --> 01:01:56,680
Speaker 1: going to fit well in the organization. Sometimes they self

1063
01:01:56,720 --> 01:01:58,480
Speaker 1: select out by the way right, you know, or as

1064
01:01:58,480 --> 01:02:00,480
Speaker 1: they in the process it becomes clear it's not a

1065
01:02:00,520 --> 01:02:03,560
Speaker 1: good fit. But those are the easies are the easy ones, Okay,

1066
01:02:03,720 --> 01:02:06,439
Speaker 1: the harder ones are where you know, look people gear

1067
01:02:06,520 --> 01:02:08,240
Speaker 1: up for an interview. You see one side of a

1068
01:02:08,280 --> 01:02:11,080
Speaker 1: person during an interview, and sometimes that's not the side

1069
01:02:11,080 --> 01:02:14,880
Speaker 1: you get, and so it's important in a couple ways. One,

1070
01:02:15,880 --> 01:02:20,200
Speaker 1: we typically have an individual that we hire interviewed by

1071
01:02:20,240 --> 01:02:24,480
Speaker 1: at least a dozen people, sometimes more, because we want,

1072
01:02:25,560 --> 01:02:27,120
Speaker 1: you know, we want to get a look at them

1073
01:02:27,280 --> 01:02:31,040
Speaker 1: in all different facets, in all different environments. Are you

1074
01:02:31,120 --> 01:02:33,760
Speaker 1: quantifying them? Is there a checklist or is it very

1075
01:02:33,800 --> 01:02:36,560
Speaker 1: subjective and I think this person is a good fit

1076
01:02:36,680 --> 01:02:39,160
Speaker 1: or not. I you know, in many respects, I wouldn't

1077
01:02:39,160 --> 01:02:41,560
Speaker 1: call it subjective, but I would say, you know, we

1078
01:02:41,640 --> 01:02:44,720
Speaker 1: have folks that do lots of interviews, and I would

1079
01:02:44,720 --> 01:02:46,960
Speaker 1: say there are certain people in our organization to do

1080
01:02:47,040 --> 01:02:49,320
Speaker 1: more than others because they're really good at it, and

1081
01:02:49,320 --> 01:02:51,520
Speaker 1: so we keep going back to them. But I would

1082
01:02:51,560 --> 01:02:55,040
Speaker 1: say that at the end of the day, it's very

1083
01:02:55,080 --> 01:02:58,080
Speaker 1: important not only to get a broad based consensus around

1084
01:02:58,080 --> 01:03:01,439
Speaker 1: a person, but also to do the background checks. It's

1085
01:03:02,080 --> 01:03:05,920
Speaker 1: mind blowing to me how many firms hire and in

1086
01:03:05,920 --> 01:03:09,400
Speaker 1: some cases very senior people and just think, well, this

1087
01:03:09,440 --> 01:03:11,200
Speaker 1: person is well known we're going to hire them, and

1088
01:03:11,240 --> 01:03:13,360
Speaker 1: if they had made one or two phone calls, they

1089
01:03:13,360 --> 01:03:16,680
Speaker 1: would find out pretty quickly that actually that individual is

1090
01:03:16,720 --> 01:03:18,840
Speaker 1: a bit of a disaster in their prior job. So

1091
01:03:19,480 --> 01:03:22,840
Speaker 1: not only do we make this effort with relatively junior people,

1092
01:03:23,120 --> 01:03:26,000
Speaker 1: but if we ever do we do sometimes hire more senior.

1093
01:03:26,480 --> 01:03:29,800
Speaker 1: We actually redouble the effort when we're talking about a

1094
01:03:29,800 --> 01:03:32,200
Speaker 1: senior person because one of the things you learn, having

1095
01:03:32,200 --> 01:03:35,080
Speaker 1: been doing this for twenty five plus years is you

1096
01:03:35,120 --> 01:03:38,240
Speaker 1: can't hide from your reputation you are. You know, once

1097
01:03:38,240 --> 01:03:41,040
Speaker 1: you've been doing this that long, you know people know

1098
01:03:41,120 --> 01:03:43,320
Speaker 1: who you are and what you're about. And so we

1099
01:03:43,360 --> 01:03:45,720
Speaker 1: want to make sure that we understand that when we

1100
01:03:45,760 --> 01:03:48,560
Speaker 1: make a hire at a senior level, but absolutely about

1101
01:03:48,600 --> 01:03:52,280
Speaker 1: the people. Absolutely important to vet them. Incredibly hard to do,

1102
01:03:52,800 --> 01:03:56,160
Speaker 1: and by having lots of folks involved in the process,

1103
01:03:56,480 --> 01:03:58,800
Speaker 1: particularly ones that are good at it, and spending a

1104
01:03:58,800 --> 01:04:01,440
Speaker 1: lot of time doing follow up in background checks, you

1105
01:04:01,480 --> 01:04:03,960
Speaker 1: get a pretty good picture of that person, and those

1106
01:04:04,000 --> 01:04:06,880
Speaker 1: are the people we want really really interesting stuff. Let

1107
01:04:07,040 --> 01:04:11,360
Speaker 1: let me throw you a curveball question. Okay, you play

1108
01:04:11,440 --> 01:04:16,200
Speaker 1: guitar in a band called Suburban Chaos. Come on, First

1109
01:04:16,200 --> 01:04:17,960
Speaker 1: of all, what sort of music do you play and

1110
01:04:18,320 --> 01:04:20,760
Speaker 1: how often do you guys gig? You yeah, we gig

1111
01:04:20,760 --> 01:04:22,240
Speaker 1: a lot. Well, first of all, we just say this,

1112
01:04:23,040 --> 01:04:25,959
Speaker 1: I've been playing guitar since I was six years old,

1113
01:04:26,000 --> 01:04:28,920
Speaker 1: seven years old, and you know, all of us, you know,

1114
01:04:29,040 --> 01:04:31,560
Speaker 1: have you've been playing guitar that long? All of us

1115
01:04:31,680 --> 01:04:34,640
Speaker 1: guitar players harbor the dream of being a rock star,

1116
01:04:37,320 --> 01:04:40,240
Speaker 1: a rhythm guitar player, and a singer. Okay, my band,

1117
01:04:41,240 --> 01:04:44,880
Speaker 1: which I've had now for about ten years, and it

1118
01:04:44,920 --> 01:04:48,680
Speaker 1: actually came about interestingly enough because um full credit to

1119
01:04:48,720 --> 01:04:52,360
Speaker 1: my wife, she actually happens to be a competitive ballroom dancer.

1120
01:04:52,960 --> 01:04:55,680
Speaker 1: So my wife would go off to competitions and you

1121
01:04:55,720 --> 01:04:59,160
Speaker 1: could see the passion she had for really, you know,

1122
01:04:59,760 --> 01:05:01,880
Speaker 1: be being a great dancer. And she's been a dancer

1123
01:05:01,840 --> 01:05:04,080
Speaker 1: for as long as I've been a guitar player. So

1124
01:05:04,120 --> 01:05:06,560
Speaker 1: I watched her, you know, starting to really get into

1125
01:05:06,600 --> 01:05:09,680
Speaker 1: this ballroom dance thing, and I realized, I'm gonna get

1126
01:05:09,720 --> 01:05:11,560
Speaker 1: with my game here, I I you know, so I

1127
01:05:11,680 --> 01:05:13,640
Speaker 1: need to have something to do too while my wife

1128
01:05:13,680 --> 01:05:17,000
Speaker 1: is traveling all over these dance competitions. So and by

1129
01:05:17,040 --> 01:05:20,919
Speaker 1: the way, she was US ballroom dance Champion for many

1130
01:05:21,000 --> 01:05:23,640
Speaker 1: years as well, so she's really good at that. So anyway,

1131
01:05:23,680 --> 01:05:26,640
Speaker 1: so I figured, okay, I've gotta I gotta have my gig, right,

1132
01:05:26,800 --> 01:05:29,640
Speaker 1: So we formed a band about ten years ago, and

1133
01:05:31,160 --> 01:05:33,880
Speaker 1: I like to say that, you know, our repertoire is,

1134
01:05:33,960 --> 01:05:37,480
Speaker 1: let's say, vintage. Well you know, listen, we're not that

1135
01:05:37,560 --> 01:05:41,160
Speaker 1: far apart on edge. Yeah, so I assume it's vintage.

1136
01:05:41,200 --> 01:05:45,200
Speaker 1: But the question is is it Credence and John Fogerty,

1137
01:05:45,240 --> 01:05:49,120
Speaker 1: is it Allman Brothers? What sort of stuff do you play? Right?

1138
01:05:49,360 --> 01:05:54,880
Speaker 1: So I would characterize our music style as yacht rock

1139
01:05:55,320 --> 01:06:00,560
Speaker 1: meets seventies disco that's eclectic or so. Yeah, when I

1140
01:06:00,600 --> 01:06:03,320
Speaker 1: think yacht rock, I think as much as I love

1141
01:06:04,400 --> 01:06:09,960
Speaker 1: Steely Dan, Yeah, which are really both, you know, spectacular

1142
01:06:10,280 --> 01:06:14,280
Speaker 1: well written music and especially with Steely Dan, not easy

1143
01:06:14,320 --> 01:06:17,080
Speaker 1: to play or at least not easy to play well, yes,

1144
01:06:17,440 --> 01:06:21,600
Speaker 1: depending on the song and on the disco side, dance music.

1145
01:06:21,680 --> 01:06:26,959
Speaker 1: So Michael Jackson, Patti LaBelle, So you could be any

1146
01:06:27,080 --> 01:06:30,440
Speaker 1: bar mitzvah bands in the Northeast exactly and show up

1147
01:06:30,480 --> 01:06:34,440
Speaker 1: and get everybody before the Viennese table. Everybody gets up

1148
01:06:34,440 --> 01:06:37,800
Speaker 1: and can move. Well, Look, it's all about entertaining people.

1149
01:06:37,840 --> 01:06:40,760
Speaker 1: It's all about playing music that uplifts them. It's all

1150
01:06:40,760 --> 01:06:43,360
Speaker 1: about playing music they want to dance too. And you

1151
01:06:43,440 --> 01:06:45,280
Speaker 1: know what, you know, you may have seen the same thing.

1152
01:06:45,280 --> 01:06:48,520
Speaker 1: I've certainly seen it. Our vintage music has had a

1153
01:06:48,520 --> 01:06:50,840
Speaker 1: bit of a resurgence, right. I mean, you know, I

1154
01:06:50,960 --> 01:06:53,280
Speaker 1: hear songs that I listened to when I was a kid,

1155
01:06:53,280 --> 01:06:55,360
Speaker 1: and I'm like, wait a second, that song is forty

1156
01:06:55,440 --> 01:06:58,960
Speaker 1: years old. And there's to satellite music. You go to

1157
01:06:59,120 --> 01:07:02,920
Speaker 1: XM and a lot of stations that aren't like a

1158
01:07:02,960 --> 01:07:07,240
Speaker 1: decade station, right, but like the blend that's where coming from.

1159
01:07:07,320 --> 01:07:10,520
Speaker 1: That's exactly right blend. So and then the other thing

1160
01:07:10,760 --> 01:07:15,120
Speaker 1: is when you look at the streaming services, new acts

1161
01:07:15,120 --> 01:07:18,920
Speaker 1: aren't breaking into streaming. It's all older stuff that has

1162
01:07:19,000 --> 01:07:23,600
Speaker 1: already has an established So. So, last band question, Just

1163
01:07:23,800 --> 01:07:27,600
Speaker 1: give me your three favorite cover songs you play and

1164
01:07:27,680 --> 01:07:32,240
Speaker 1: that'll allow me to know exactly who you are. Yeah, okay,

1165
01:07:32,400 --> 01:07:35,880
Speaker 1: Well it'll show you a cross section of Okay, we do, so,

1166
01:07:36,040 --> 01:07:40,160
Speaker 1: I would say, um, we do. Uh, we do a

1167
01:07:40,200 --> 01:07:42,600
Speaker 1: lot of you know, as you say, seventies rocks. So,

1168
01:07:42,920 --> 01:07:45,160
Speaker 1: but we also do you know, you know chade. So,

1169
01:07:45,400 --> 01:07:50,760
Speaker 1: for example, we play smooth Operator. So we play Smooth Operator,

1170
01:07:50,800 --> 01:07:54,080
Speaker 1: which is great. Uh, we we do. Um, you're not

1171
01:07:54,120 --> 01:07:56,760
Speaker 1: doing the vocals to Smooth Operator, I assume. Oh no,

1172
01:07:56,840 --> 01:08:01,600
Speaker 1: we have a we have a female at who is fantastic. Uh.

1173
01:08:01,680 --> 01:08:04,800
Speaker 1: You know, we do more of a rock song called

1174
01:08:04,840 --> 01:08:08,480
Speaker 1: all right Now by Free of course. That was Paul Rodgers.

1175
01:08:08,760 --> 01:08:13,880
Speaker 1: Paul Roger. That was a giant song. And we do

1176
01:08:14,360 --> 01:08:16,800
Speaker 1: a song that is a little bit less known by

1177
01:08:16,840 --> 01:08:18,400
Speaker 1: a guy named Paul Carrick when he was with a

1178
01:08:18,439 --> 01:08:22,479
Speaker 1: band called Ace, called so long excuse me, how long?

1179
01:08:23,080 --> 01:08:25,720
Speaker 1: How long has this been going on? Yeah? That was

1180
01:08:25,800 --> 01:08:30,360
Speaker 1: a Spencer's Gift soundtrack type of thing. Exactly back exactly

1181
01:08:30,439 --> 01:08:33,599
Speaker 1: so sore. I think we're almost the same exactly. Yeah,

1182
01:08:33,760 --> 01:08:37,000
Speaker 1: so age at least musically. Yeah. So we play. You know,

1183
01:08:37,080 --> 01:08:40,080
Speaker 1: we play all over New York, in Connecticut, and we've

1184
01:08:40,080 --> 01:08:42,559
Speaker 1: played as far as Newport, Rhode Island in New Jersey.

1185
01:08:42,960 --> 01:08:46,360
Speaker 1: But you know, one thing about a band that's very interesting, Barry,

1186
01:08:46,479 --> 01:08:50,080
Speaker 1: is that, unlike a company like ours, where there is

1187
01:08:50,160 --> 01:08:53,240
Speaker 1: clear you know, you're the boss or she's the boss

1188
01:08:53,320 --> 01:08:56,120
Speaker 1: or whoever, it's a different dynamic. Oh, it's a democracy.

1189
01:08:56,520 --> 01:08:58,599
Speaker 1: And by the way, you know, I have to put

1190
01:08:58,640 --> 01:09:03,120
Speaker 1: all of my CEO you know, tendencies, you know it,

1191
01:09:03,320 --> 01:09:05,960
Speaker 1: you know, leave them at the door. Right, So suddenly,

1192
01:09:06,400 --> 01:09:09,479
Speaker 1: you know, our band is named Suburban Chaos, and in

1193
01:09:09,520 --> 01:09:12,360
Speaker 1: many respects it can be chaos. Right. Everybody wants to

1194
01:09:12,400 --> 01:09:14,840
Speaker 1: play their own songs. Everybody wants to do this, and

1195
01:09:15,160 --> 01:09:17,600
Speaker 1: this is first et cetera. And you really have to

1196
01:09:17,640 --> 01:09:20,799
Speaker 1: be much more of a you know, it's a democratic process,

1197
01:09:20,880 --> 01:09:22,760
Speaker 1: let's put it that way, as opposed to a you know,

1198
01:09:22,800 --> 01:09:24,920
Speaker 1: as opposed to a to a company. But it's a

1199
01:09:24,920 --> 01:09:27,519
Speaker 1: lot of fun. And you know, we play, you know,

1200
01:09:27,560 --> 01:09:30,400
Speaker 1: we probably you know during COVID, we you know when

1201
01:09:30,479 --> 01:09:33,080
Speaker 1: obviously all that music was was turned off, but we

1202
01:09:33,160 --> 01:09:36,400
Speaker 1: had something like forty or fifty gigs you know, teed

1203
01:09:36,479 --> 01:09:38,479
Speaker 1: up when we you know when we uh, when we

1204
01:09:38,479 --> 01:09:40,000
Speaker 1: went out for COVID. So we play. A lot of

1205
01:09:40,040 --> 01:09:43,200
Speaker 1: people were doing remote zoom gigs during during the lockdown.

1206
01:09:43,520 --> 01:09:45,880
Speaker 1: Absolutely and and uh but you know, I think you

1207
01:09:45,960 --> 01:09:48,240
Speaker 1: have to have a passion, you know, and I think

1208
01:09:48,240 --> 01:09:51,040
Speaker 1: in my case, you know, music is my happy place,

1209
01:09:51,680 --> 01:09:54,000
Speaker 1: and you know, everybody needs to have a place they

1210
01:09:54,000 --> 01:09:57,120
Speaker 1: can go, and you know, my my happy places, you know,

1211
01:09:57,240 --> 01:10:00,360
Speaker 1: Michael Jackson or whoever, you know, I totally get it.

1212
01:10:00,439 --> 01:10:02,599
Speaker 1: So so I only have you for a few more minutes.

1213
01:10:02,640 --> 01:10:06,160
Speaker 1: Let me jump to my speed round my favorite questions,

1214
01:10:06,760 --> 01:10:10,559
Speaker 1: starting with what has been keeping you entertained? What are you?

1215
01:10:10,640 --> 01:10:14,840
Speaker 1: What are you watching? Um on Netflix or Amazon Prime?

1216
01:10:15,520 --> 01:10:20,240
Speaker 1: So I watched a movie that really, you know, given

1217
01:10:20,280 --> 01:10:23,639
Speaker 1: I you know, I've spoken about my background and more recently,

1218
01:10:23,640 --> 01:10:28,479
Speaker 1: actually found my birth family. Oh really, you know, kind

1219
01:10:28,520 --> 01:10:31,360
Speaker 1: of interesting. And turns out that I grew up thinking

1220
01:10:31,400 --> 01:10:33,760
Speaker 1: I was an only child, and it turns out I

1221
01:10:33,800 --> 01:10:38,720
Speaker 1: have nine siblings. Get out nine siblings. And by the way,

1222
01:10:38,760 --> 01:10:42,519
Speaker 1: they've been fantastic and incredibly excited and supportive, and most

1223
01:10:42,520 --> 01:10:44,880
Speaker 1: of them are still back in Buffalo, New York. How

1224
01:10:44,880 --> 01:10:47,960
Speaker 1: did you find them? Because I've heard from people who

1225
01:10:48,040 --> 01:10:50,439
Speaker 1: do twenty three and me, all of a sudden, these

1226
01:10:50,479 --> 01:10:53,880
Speaker 1: local relatives pop up that they had no idea about ancestry.

1227
01:10:53,960 --> 01:10:56,400
Speaker 1: So I found I found my family and ancestry. And

1228
01:10:56,400 --> 01:11:00,679
Speaker 1: and I was watching a movie called Three Identical Stranger. Sure,

1229
01:11:01,560 --> 01:11:05,760
Speaker 1: and obviously a lot of those dynamics you know, really

1230
01:11:05,800 --> 01:11:09,000
Speaker 1: hit home to me, you know, as I watched three

1231
01:11:09,040 --> 01:11:12,040
Speaker 1: brothers who've been separated at birth. You know, I have

1232
01:11:12,400 --> 01:11:16,800
Speaker 1: you know, I have three brothers as well, and you know,

1233
01:11:16,880 --> 01:11:19,080
Speaker 1: it was very interesting to see. And of course the

1234
01:11:19,120 --> 01:11:23,160
Speaker 1: big question in that movie is is it nature or

1235
01:11:23,240 --> 01:11:27,960
Speaker 1: is it nurture? And the conclusion initially they all thought

1236
01:11:28,720 --> 01:11:32,200
Speaker 1: that it was nature, as you recall, oh, well he

1237
01:11:32,320 --> 01:11:35,200
Speaker 1: does the same thing. Actually, then you find out that

1238
01:11:35,240 --> 01:11:38,240
Speaker 1: it really was nurture, and it really was how you

1239
01:11:38,280 --> 01:11:40,960
Speaker 1: were raised, not you know, you were born. You your

1240
01:11:41,000 --> 01:11:42,880
Speaker 1: three brothers, and you do everything the same together and

1241
01:11:42,920 --> 01:11:45,160
Speaker 1: you're identical. Remember early on in that movie, they were

1242
01:11:45,160 --> 01:11:47,320
Speaker 1: all talking about, oh, this person does this, and we

1243
01:11:47,360 --> 01:11:49,559
Speaker 1: all do the same thing, and always there's no doubt

1244
01:11:49,600 --> 01:11:51,960
Speaker 1: they are all these crazy parallels. And then when you

1245
01:11:52,000 --> 01:11:55,200
Speaker 1: start to take peel off, that first layers all about

1246
01:11:55,320 --> 01:11:57,519
Speaker 1: it's all about how you were raised, and it's all

1247
01:11:57,560 --> 01:12:00,439
Speaker 1: about you know, were you raised in an ronment of

1248
01:12:00,520 --> 01:12:03,920
Speaker 1: love and happiness and positivity and you can do this,

1249
01:12:04,760 --> 01:12:07,120
Speaker 1: or were you raised in a very tough environment. And so,

1250
01:12:07,640 --> 01:12:10,920
Speaker 1: you know, that movie was incredibly moving to me because

1251
01:12:11,120 --> 01:12:14,559
Speaker 1: you know, I watched the thesis unfold and so that's

1252
01:12:14,600 --> 01:12:18,439
Speaker 1: an example, you know, of of of one of the

1253
01:12:18,439 --> 01:12:21,280
Speaker 1: things that I watched. So let's talk about mentors. You've

1254
01:12:21,280 --> 01:12:23,920
Speaker 1: had a really fascinating career, working with a lot of

1255
01:12:24,479 --> 01:12:30,400
Speaker 1: really interesting people who helped shape your career. So I

1256
01:12:30,720 --> 01:12:35,040
Speaker 1: met David Rubinstein very very early on, actually even before

1257
01:12:35,200 --> 01:12:38,000
Speaker 1: my Drexful days. I was a lawyer for for a

1258
01:12:38,000 --> 01:12:40,720
Speaker 1: few years, and David was as well. I actually met

1259
01:12:40,800 --> 01:12:42,040
Speaker 1: him when he was a lawyer and I was a

1260
01:12:42,080 --> 01:12:44,439
Speaker 1: loyalty as well. It was kind of a funny story.

1261
01:12:44,479 --> 01:12:48,000
Speaker 1: I was a new associated a law firm and I

1262
01:12:48,080 --> 01:12:50,880
Speaker 1: was directed to report to him, and as it turns out,

1263
01:12:50,920 --> 01:12:52,680
Speaker 1: he really didn't need anyone to help him, so I

1264
01:12:52,680 --> 01:12:54,439
Speaker 1: never really got a chance to work for him, but

1265
01:12:54,560 --> 01:12:56,960
Speaker 1: I met him. Then we ended up at the business

1266
01:12:57,000 --> 01:12:58,920
Speaker 1: that I mentioned, Indos, who as we ended up being

1267
01:12:58,960 --> 01:13:01,759
Speaker 1: one of their law are just limited partners and financed

1268
01:13:01,800 --> 01:13:05,400
Speaker 1: many money deals for not just David, but Glenn Yungcan

1269
01:13:05,520 --> 01:13:08,280
Speaker 1: who was an associate back then and being clear in others.

1270
01:13:08,560 --> 01:13:10,759
Speaker 1: And so I've known David for you know, over twenty

1271
01:13:10,760 --> 01:13:14,280
Speaker 1: five years. Obviously we sold our firm to Carlisle, and

1272
01:13:14,320 --> 01:13:16,000
Speaker 1: I would say, of all the folks that I know

1273
01:13:16,080 --> 01:13:21,880
Speaker 1: in our business, really truly just an incredible, you know,

1274
01:13:22,000 --> 01:13:26,040
Speaker 1: incredible person and frankly brilliant in terms of how he

1275
01:13:26,160 --> 01:13:30,240
Speaker 1: built Carlisle into a global private equity firm, and of course,

1276
01:13:30,240 --> 01:13:33,240
Speaker 1: as you know, being here at Bloomberg, you know how

1277
01:13:33,280 --> 01:13:39,000
Speaker 1: he has transitioned incredibly to be one of the most

1278
01:13:39,360 --> 01:13:43,680
Speaker 1: interesting media personalities and interviewers. And you know, we need

1279
01:13:43,720 --> 01:13:45,840
Speaker 1: to get him on your show. I mean, he's well.

1280
01:13:45,880 --> 01:13:48,240
Speaker 1: I think we were scheduled when his first book came out,

1281
01:13:48,320 --> 01:13:51,600
Speaker 1: and then the pandemic lockdown happened, I got postponed. What

1282
01:13:51,960 --> 01:13:55,439
Speaker 1: I find fascinating about him is the more people are

1283
01:13:55,479 --> 01:13:57,800
Speaker 1: running around with their hair on fire, the more he

1284
01:13:58,000 --> 01:14:01,639
Speaker 1: is just calm and the voice of reason. I love

1285
01:14:01,720 --> 01:14:06,280
Speaker 1: that sort of contrarianism that you know, you you really

1286
01:14:06,520 --> 01:14:10,760
Speaker 1: when you could see clearly when chaos erupts. That's a

1287
01:14:10,880 --> 01:14:13,840
Speaker 1: really valuable skill and he seems to have have that

1288
01:14:14,240 --> 01:14:16,560
Speaker 1: in spades. He really is full up with that. He

1289
01:14:17,080 --> 01:14:19,360
Speaker 1: is and and you know, I've gotten obviously to you know,

1290
01:14:19,439 --> 01:14:23,080
Speaker 1: continue to know him well. And I will say that,

1291
01:14:23,520 --> 01:14:25,320
Speaker 1: you know, you know, the other thing that I would

1292
01:14:25,320 --> 01:14:27,400
Speaker 1: I would say about about his time is if you

1293
01:14:27,439 --> 01:14:31,560
Speaker 1: look at his leadership of Carlisle and really building that firm,

1294
01:14:31,600 --> 01:14:34,080
Speaker 1: and you look across the folks that are both there

1295
01:14:34,160 --> 01:14:37,040
Speaker 1: now and are alumni, you can see what I refer

1296
01:14:37,160 --> 01:14:39,080
Speaker 1: to in terms of the people. I mean, if you

1297
01:14:39,120 --> 01:14:42,439
Speaker 1: look at the first twenty or so folks that that

1298
01:14:42,520 --> 01:14:45,000
Speaker 1: were at Carlisle, you know, many of them were still

1299
01:14:45,040 --> 01:14:47,519
Speaker 1: there at the firm, you know, you know, fifteen twenty

1300
01:14:47,560 --> 01:14:50,559
Speaker 1: years later, And I think that speaks to that same

1301
01:14:50,640 --> 01:14:53,639
Speaker 1: dynamic I referred to, you know, building a real culture.

1302
01:14:53,680 --> 01:14:55,880
Speaker 1: And you know, that's something I admire tremendously and I

1303
01:14:55,920 --> 01:14:58,080
Speaker 1: certainly feel that, you know, he's a good example of

1304
01:14:58,160 --> 01:15:01,040
Speaker 1: someone who's done that and trans Asians so you know,

1305
01:15:01,160 --> 01:15:05,280
Speaker 1: seamlessly into being an author, an author and an investor

1306
01:15:05,280 --> 01:15:08,679
Speaker 1: and ultimately a media personality. So he's somebody admired very much.

1307
01:15:08,840 --> 01:15:12,240
Speaker 1: So so let's talk about some books. What are your favorites?

1308
01:15:12,240 --> 01:15:15,280
Speaker 1: What are you reading right now? So I listen to books.

1309
01:15:15,439 --> 01:15:17,240
Speaker 1: You know, I'm kind of, you know, I'm kind of

1310
01:15:17,280 --> 01:15:19,040
Speaker 1: the point now where a little bit lazy, but you know,

1311
01:15:19,479 --> 01:15:21,439
Speaker 1: you just you know, you go on, you go on audible,

1312
01:15:21,479 --> 01:15:23,439
Speaker 1: and you know, you just you know, just stop and

1313
01:15:23,439 --> 01:15:25,719
Speaker 1: then you keep going. So I'm listening to a book

1314
01:15:25,760 --> 01:15:28,920
Speaker 1: right now that I think is absolutely fascinating. I would

1315
01:15:28,920 --> 01:15:31,880
Speaker 1: certainly recommend it. It's called The Splendid in the Vial

1316
01:15:32,400 --> 01:15:37,640
Speaker 1: Uh Eric Eric Larson, and it's all about England in

1317
01:15:37,800 --> 01:15:41,920
Speaker 1: Churchill in advance of World War Two and really leading

1318
01:15:42,000 --> 01:15:45,720
Speaker 1: up through World War Two. And what's fascinating about it is,

1319
01:15:45,840 --> 01:15:47,800
Speaker 1: I guess, you know, maybe never and I never really

1320
01:15:47,800 --> 01:15:52,559
Speaker 1: fully realized how totally unprepared England was for World War Two,

1321
01:15:52,600 --> 01:15:56,880
Speaker 1: let alone the United States, and how vulnerable they were,

1322
01:15:57,479 --> 01:16:00,320
Speaker 1: you know, in those early days, and how easy it

1323
01:16:00,320 --> 01:16:03,200
Speaker 1: would have been for you know, Germany, which had basically

1324
01:16:03,200 --> 01:16:05,559
Speaker 1: conquered the entire continent. I'm at the point now where

1325
01:16:05,640 --> 01:16:08,080
Speaker 1: you know, they've they've they've you know, they've conquered France.

1326
01:16:08,120 --> 01:16:10,360
Speaker 1: I won't spoil the ending for you, but it's fantastic

1327
01:16:10,400 --> 01:16:14,080
Speaker 1: and it's a great book. Everything he's ever written is deep, fascinating,

1328
01:16:14,439 --> 01:16:18,200
Speaker 1: deeply researched. He's a fabulous writer, he is. And it's

1329
01:16:18,280 --> 01:16:21,320
Speaker 1: it's a super colorful book because it really you really

1330
01:16:21,479 --> 01:16:26,280
Speaker 1: feel like you're in the shoes of Churchill as he's

1331
01:16:26,439 --> 01:16:29,479
Speaker 1: kind of navigating what is a you know, you know,

1332
01:16:29,600 --> 01:16:31,719
Speaker 1: potentially could have been the end of the free world

1333
01:16:31,840 --> 01:16:34,240
Speaker 1: or know it right. So it's a great read. I

1334
01:16:34,280 --> 01:16:36,880
Speaker 1: won't spoil the you know, the the dynamics of it,

1335
01:16:36,920 --> 01:16:40,880
Speaker 1: but it's it's terrific. Let's get to our last two questions,

1336
01:16:41,000 --> 01:16:44,200
Speaker 1: starting with what sort of advice would you give to

1337
01:16:44,240 --> 01:16:49,320
Speaker 1: a recent college grad interested in a career in private credit,

1338
01:16:49,400 --> 01:16:54,000
Speaker 1: private equity finance in general? Yeah, so you know, I

1339
01:16:54,040 --> 01:16:57,400
Speaker 1: think you know, in this age of instant success, if

1340
01:16:57,400 --> 01:17:01,680
Speaker 1: you will, people become media personalities overnight. They become TikTok

1341
01:17:01,880 --> 01:17:04,800
Speaker 1: you know, stars, and you know and and and in

1342
01:17:05,160 --> 01:17:08,080
Speaker 1: a week. Um, I would say the advice I would

1343
01:17:08,080 --> 01:17:13,240
Speaker 1: give to young people is that, UM, make sure that

1344
01:17:13,280 --> 01:17:17,600
Speaker 1: you understand going in that you know, it's all about

1345
01:17:17,680 --> 01:17:20,599
Speaker 1: the people you work with, the people you learn from.

1346
01:17:21,080 --> 01:17:25,320
Speaker 1: Surround yourself. And then this is both personal and professional.

1347
01:17:25,720 --> 01:17:28,880
Speaker 1: Surround yourself with people that love you, people that want

1348
01:17:28,920 --> 01:17:32,080
Speaker 1: you to be successful. If you surround yourself with people

1349
01:17:32,200 --> 01:17:36,280
Speaker 1: that have negativity and negative thoughts, you'll have negative thoughts, right,

1350
01:17:36,320 --> 01:17:39,280
Speaker 1: But if you surround yourself with people that you admire

1351
01:17:39,560 --> 01:17:42,640
Speaker 1: and respect and truly want you to be successful and

1352
01:17:42,680 --> 01:17:45,200
Speaker 1: that you can learn from and grow from, that's an

1353
01:17:45,240 --> 01:17:48,040
Speaker 1: incredibly important dynamic. And the other thing I would say,

1354
01:17:48,080 --> 01:17:49,760
Speaker 1: which is I think you know and by the way,

1355
01:17:49,760 --> 01:17:53,360
Speaker 1: those friendships and relationships last a lifetime. I've got folks

1356
01:17:53,360 --> 01:17:56,800
Speaker 1: that I was in the bullpen with at Drexel back

1357
01:17:56,840 --> 01:17:59,240
Speaker 1: in you know, back in the mid eighties that I'm

1358
01:17:59,280 --> 01:18:01,840
Speaker 1: still great friends with and still learn from and talk

1359
01:18:01,920 --> 01:18:04,800
Speaker 1: to all the time. So you know, surrounding yourself with

1360
01:18:04,840 --> 01:18:09,040
Speaker 1: those people creates lifelong relationships and often coming very handy

1361
01:18:09,040 --> 01:18:11,200
Speaker 1: in the business worlds I'm sure you've seen in your career.

1362
01:18:11,720 --> 01:18:14,960
Speaker 1: The other thing I would say is I would remind

1363
01:18:15,000 --> 01:18:18,000
Speaker 1: them something that I think is a little bit hard.

1364
01:18:18,120 --> 01:18:20,800
Speaker 1: I think for a young person understand thinking, oh my gosh,

1365
01:18:20,840 --> 01:18:22,720
Speaker 1: you know I went from my first interview and I

1366
01:18:22,760 --> 01:18:27,280
Speaker 1: got rejected. You will be rejected, You will fail. The

1367
01:18:27,360 --> 01:18:30,320
Speaker 1: mark of the most successful people I know. And this

1368
01:18:30,360 --> 01:18:34,200
Speaker 1: includes athletes like Tom Brady, who, by the way, you know,

1369
01:18:34,400 --> 01:18:36,160
Speaker 1: was drafted in the fifth round and thought of his

1370
01:18:36,200 --> 01:18:38,320
Speaker 1: career I'm sure thought of his career was you know,

1371
01:18:38,479 --> 01:18:41,400
Speaker 1: m quasi over at that point, sitting on the bench

1372
01:18:41,439 --> 01:18:44,559
Speaker 1: in New England. But what you realize is it's all

1373
01:18:44,600 --> 01:18:48,680
Speaker 1: about having the tenacity and the willingness to pay the

1374
01:18:48,760 --> 01:18:51,360
Speaker 1: price to be really good at what you do. So

1375
01:18:51,720 --> 01:18:55,360
Speaker 1: you will fail. Do not let failure stop you in

1376
01:18:55,479 --> 01:18:59,400
Speaker 1: any way, shape or form. Recognize you learn from failure,

1377
01:18:59,439 --> 01:19:03,000
Speaker 1: and it's the failures that ultimately inspire the successes. When

1378
01:19:03,000 --> 01:19:06,120
Speaker 1: I think about my career, it was absolutely the times

1379
01:19:06,120 --> 01:19:09,880
Speaker 1: when it didn't work out for whatever reason that you know,

1380
01:19:09,960 --> 01:19:14,120
Speaker 1: you analyze, you determine, Okay, what was it that made

1381
01:19:14,120 --> 01:19:16,000
Speaker 1: it not work out? And how do I fix that?

1382
01:19:16,400 --> 01:19:18,599
Speaker 1: And I think in many respects, where we are today

1383
01:19:18,600 --> 01:19:21,040
Speaker 1: as a firm is a great example of that because

1384
01:19:21,040 --> 01:19:24,240
Speaker 1: we tacked several times along the way with our firm

1385
01:19:24,280 --> 01:19:27,120
Speaker 1: and now we're in a phenomenal position with great partners

1386
01:19:27,160 --> 01:19:30,960
Speaker 1: and great people. So learning from and not letting failure

1387
01:19:31,200 --> 01:19:34,519
Speaker 1: deter you is really important. And our final question, what

1388
01:19:34,600 --> 01:19:37,519
Speaker 1: do you know about the world of private credit and

1389
01:19:37,600 --> 01:19:40,640
Speaker 1: investing today? You wish you knew forty years or so

1390
01:19:40,680 --> 01:19:44,120
Speaker 1: ago when you were first getting started. You know, I

1391
01:19:45,320 --> 01:19:47,240
Speaker 1: think that you know when I was, you know, like

1392
01:19:47,280 --> 01:19:49,800
Speaker 1: all of us, when you're young in the business, you know,

1393
01:19:49,960 --> 01:19:53,719
Speaker 1: you're convinced that it's all about showing everyone how smart

1394
01:19:53,760 --> 01:19:56,280
Speaker 1: you are and running the fastest models. I can remember

1395
01:19:56,280 --> 01:19:58,160
Speaker 1: the days at Direct, so we were all in the bullpen.

1396
01:19:58,520 --> 01:20:00,479
Speaker 1: They used to call it the model room, and everybody

1397
01:20:00,479 --> 01:20:02,479
Speaker 1: would go in there, and you know, everybody would you know,

1398
01:20:02,520 --> 01:20:04,559
Speaker 1: we would all compete for who had the most, you know,

1399
01:20:04,600 --> 01:20:07,360
Speaker 1: the technologically advanced financial models, and it was all about

1400
01:20:07,400 --> 01:20:10,080
Speaker 1: the numbers. And I think that, you know, there's certain

1401
01:20:10,120 --> 01:20:12,360
Speaker 1: an element of our business that is, you know, is

1402
01:20:12,680 --> 01:20:16,160
Speaker 1: about the numbers. But you know, thirty years ago, you know,

1403
01:20:16,320 --> 01:20:18,640
Speaker 1: I was a young kid thinking, Okay, well, you know,

1404
01:20:18,680 --> 01:20:21,320
Speaker 1: it's all about the numbers, and whoever's the fastest model

1405
01:20:21,400 --> 01:20:23,720
Speaker 1: or wins, whoever's got the most, you know, whoever's the

1406
01:20:23,760 --> 01:20:27,040
Speaker 1: smartest wins. But what becomes very clear is it's all

1407
01:20:27,080 --> 01:20:30,280
Speaker 1: about the people, not the numbers, and it's all about

1408
01:20:30,400 --> 01:20:35,120
Speaker 1: building relationships and working with people that ultimately make you better.

1409
01:20:35,560 --> 01:20:37,880
Speaker 1: And I think if you know, you know, I certainly

1410
01:20:37,880 --> 01:20:40,439
Speaker 1: know that today, and I certainly figure that out along

1411
01:20:40,439 --> 01:20:44,120
Speaker 1: the way, but I think understanding that, yes, the technical

1412
01:20:44,200 --> 01:20:47,200
Speaker 1: side of the business is important, but it's really ultimately

1413
01:20:47,200 --> 01:20:50,880
Speaker 1: the people side, the relationship side, that the ability to

1414
01:20:51,880 --> 01:20:55,000
Speaker 1: surround yourself and to motivate and mentor the best people

1415
01:20:55,320 --> 01:20:57,720
Speaker 1: that create the best organizations. I mean, look at this

1416
01:20:57,840 --> 01:21:00,840
Speaker 1: organization here. I mean, you know, it's all about that.

1417
01:21:00,920 --> 01:21:03,599
Speaker 1: And I think that you know, that's something I've learned

1418
01:21:03,600 --> 01:21:06,080
Speaker 1: along the way, and I wish i'd known that a

1419
01:21:06,120 --> 01:21:09,880
Speaker 1: lot earlier. Thanks Ken for being so generous with your time.

1420
01:21:10,080 --> 01:21:13,919
Speaker 1: We have been speaking with Ken ken Sell, Founder, president

1421
01:21:14,000 --> 01:21:18,880
Speaker 1: and CEO of Churchill Asset Management. If you enjoy this conversation,

1422
01:21:19,000 --> 01:21:21,840
Speaker 1: well check out any of the previous four hundred and

1423
01:21:21,920 --> 01:21:26,000
Speaker 1: ninety two we've done over the past nine years. You

1424
01:21:26,040 --> 01:21:30,479
Speaker 1: can find those at iTunes, Spotify, YouTube, wherever you find

1425
01:21:30,520 --> 01:21:34,719
Speaker 1: your favorite podcasts. Sign up from my daily reading list

1426
01:21:34,800 --> 01:21:38,440
Speaker 1: at Ritholtz dot com. Follow me on Twitter at Rivolts,

1427
01:21:38,600 --> 01:21:43,040
Speaker 1: Follow all of the Bloomberg podcasts on Twitter at podcast

1428
01:21:43,720 --> 01:21:45,519
Speaker 1: I would be remiss if I did not thank the

1429
01:21:45,600 --> 01:21:48,479
Speaker 1: crack team that helps put these conversations together each week.

1430
01:21:48,960 --> 01:21:52,960
Speaker 1: Justin Milner is my audio engineer. Fatigua Valbron is my

1431
01:21:53,080 --> 01:21:57,200
Speaker 1: project manager. Sean Russo is my researcher. Paris Wald is

1432
01:21:57,240 --> 01:22:01,719
Speaker 1: my producer. I'm Barry Ritolts. You've been listening to Masters

1433
01:22:01,720 --> 01:22:04,600
Speaker 1: in Business on Bloomberg Radio.