E393: What 8,000 LPs and GPs Taught Him About Investing | Ron Biscardi

What if the biggest edge in investing isn’t information, strategy, or even intelligence—but relationships? In this episode, I sit down with Ron Biscardi, Co-Founder and CEO of iConnections, to discuss what separates the world’s best allocators and investment managers from everyone else. Ron shares lessons from building the largest capital introduction ecosystem in alternatives, with more than 26,000 members across 80+ countries representing over $55 trillion in assets. We explore the role of EQ in investing, why relationships compound into investment advantages, how emerging managers should think about fundraising, and why some of the most successful investment firms are built by entrepreneurs rather than investors alone. We also discuss conviction, illiquidity, LP decision-making, manager selection, and the realities of navigating capital markets over decades.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Weisburd?

  How much of a factor is having an anchor today?

• 0:03Speaker 01

  It's a big one. It's a signal to all the other investors that someone, hopefully, did the work to understand the strategy, to evaluate the manager, and got comfortable that both the manager, management team, and the strategy are worth betting on. People who get into the business and think they're going to raise money in three months or six months, you're just setting yourself up to lose. So you have to be ready for a long process. And then it's really just a matter of getting out there and being in front of people as many times and as often as possible.

• 0:43David Weisburd?

  What separates the top 1% of allocators from everybody else?

• 0:48Speaker 01

  I think there's a huge, like, a ton of similarities between the top allocators and the top managers. Generally speaking, I feel like the most common thread is their interest in learning. They're constantly educating themselves, learning new things. They're approaching their job with this voracious desire to learn new things and to get into the weeds and to all the details. And I think there's also, while Wall Street is certainly known for its egos, in my experience, the best investors always have a very humble

• 1:30Speaker 01

  side to them. I mean, this is a business that is ruthless. The market doesn't care about anything. The market does what the market does. And it's our job to try and navigate that market. And I think the best investors approach it with a sense of humility because you can be really, really confident in your view and still be completely wrong because maybe you missed something. And this is all probabilistic, which means some percentage of the time, it's not going to go the way it should have gone. You know, I'm a big fan of poker and when I'm playing a hand and I'm 75% to win,

• 2:11Speaker 01

  25% of the time, I'm still going to lose, even though I was a favorite to win. And that's how the stock market works as well. So in my experience, the best investors are ones who are thinking that way. They have that humility and they are just sponges in terms of reading and speaking to other people, digesting viewpoints that conflict with their own viewpoints. So that I feel like is kind of the most common characteristic.

• 2:42David Weisburd?

  There's the IQ aspect to it. What about on the EQ? What's the pattern?

• 2:47Speaker 01

  EQ is absolutely huge. EQ enables you to use a network and relationships to gather more information. Basically, every super successful LP and GP I've ever met, they all have tremendous networks. They're all spending like, I was at an event with, you know, I won't mention the name, but I was at an event with absolutely one of the top tech fund managers in the world. And we're having a chat and a guy walks by and he sees him in his peripheral vision. He's like, that guy is part of Google's AI team. I've got to go talk to him. I looked at the guy, I had no idea who he was.

• 3:29Speaker 01

  I would have never had any idea he was part of the team. And I'm pretty sure, by the way, he was many layers down in the team. This was not the guy running, you know, Google's AI project.

• 3:39David Weisburd?

  Wasn't Demisus, obviously.

• 3:40Speaker 01

  It was not Demisus. And but this investor knew who he was, knew that he was really smart, knew that he probably could learn something from him. And I think you have to have some personality, right? If you're going to go build relationships with people who can provide information that's critical into your investment decisions.

• 4:05Speaker 01

  You do have to have some personality. It's not like you're sitting in a room and it's all math. I guess it maybe in the quant area of investing, it's certainly more math heavy and maybe what I'm describing is less of an issue. But I think actually even for those guys, when things don't go exactly well, or you're trying to learn what other people are doing with their algorithms and their, you know, computer setups, it is still good to be able to lean on relationships to learn what are other people's approach, especially when it comes to problem solving. Because if someone else has already seen that problem and solved it, they can really short circuit the process for you.

• 4:45David Weisburd?

  One thing I've noticed in the very top allocators, like Dan Feder from University of Michigan, we've had chats about his philosophy. He'll come in early to support managers. And I asked him the question, what kind of economics are you trying to get by coming in early? And he's like, that's not the thing. I want to secure the relationship because the relationships are won at the early stage. And then you fast forward, there was a recent article that came out, which I could quote. University of Michigan has a $2 billion position in OpenAI. And I think so much of the industry is focused on these zero sum dynamics of how do I push down the fees? And very few people are playing it at the game that a Dan is playing it.

• 5:28Speaker 01

  The fee thing, to be honest, has never really made any sense to me. If you want access to the best investors in the world, I mean, the worst thing you can do is go with the fee. It's really no different than any other product in the economy. If you want quality, you have to pay for quality. And if they're going to generate a return of 20, 25, 30%, you know, if someone who's in those kind of ranges, are you really going to beat them up over the management fee? I mean, it seems crazy to me. And I've, you know, we have a tremendous amount of data at iConnections because we've had so many GPs come through the system and download all of the details of their funds. And the top tier managers are absolutely being paid top dollar.

• 6:13Speaker 01

  And they should be paid top dollar. They're delivering the best returns.

• 6:16David Weisburd?

  It's more efficient than not.

• 6:18Speaker 01

  I think it's more of a headline grabbing thing. And it also, it obviously can be strategy dependent. I guess it depends on what you're looking for, but when you said that, I kind of went straight to thinking about some of the venture funds I know.

• 6:32David Weisburd?

  Two and a half and 30.

• 6:36Speaker 01

  If they have Anthropic and OpenAI and SpaceX in their portfolio, you should be pretty happy to pay those rates.

• 6:45David Weisburd?

  What about conviction? Is that something that you see in the top allocators? And if so, how does that play itself out?

• 6:52Speaker 01

  Especially in alternatives, you have to have conviction. You can't trade in and out quickly, right? In the alts world, I mean, even in hedge funds, which are a little bit more liquid, you're generally, you're not buying it, selling it, rebuying it, selling it. It's just not really how it works. It's so for sure. I mean, our LPs are spending a tremendous amount of time getting to know the teams that they're about to give money to, understanding their strategy, getting to know them as people, getting comfortable and ultimately developing real conviction about, you know, that allocation before they make it. It's very important, but you also have to be careful of it because you don't want your conviction to override common sense.

• 7:36Speaker 01

  Because when things don't go well, or everyone's belief that a particular strategy was the right way to go, and then it doesn't play out, and the market starts to show you that the thesis was wrong, you do have to adjust. The best investors are always willing to take in new information and make a new decision. When, you know, when the information set changes, you have to reevaluate. But I do think it's definitely an industry that focuses on building that conviction before an investment decision is made.

• 8:11David Weisburd?

  You could chase conviction off the cliff. The most obvious example of that is GameStop. It was clearly the right decision to short it, and yet Melvin Capital and other funds blew up.

• 8:22Speaker 01

  Yeah, it just, it didn't go the way everyone thought it would.

• 8:28David Weisburd?

  I crossed out the word conviction in my dictionary and I have a new term for it. I call it Antonio Gracias. When I saw the news that Antonio Gracias had backed SpaceX 30 times, I was embarrassed because I had gone around and thought I had high conviction companies that I'd backed three, four times and I was off by an order of magnitude of 10. But what Antonio has done, what several other funds, founders fund also has these crazy kind of conviction vests is you have to see it to kind of believe it.

• 9:00Speaker 01

  Yeah, and Antonio is really unique because Antonio and the team at Valor are very operationally experienced and they are in the weeds with their portfolio companies at a deeper level than almost any fund I've ever seen. So, you know, when Tesla was going through its crisis in developing its production line and they went through the period where they had put too much automation into the production of the cars and they had to rethink all of that. I mean, Antonio was at the factory with Elon, working through those problems. I mean, so when you're that deep into the investment, it enables you to be that much more convicted.

• 9:46Speaker 01

  So I'm sure that when other investors were looking at PE ratios and what year-over-year numbers looked like, Antonio understood at a much deeper level what was actually happening in the production process. And I'm sure that informed him in a way that made him comfortable committing.

• 10:05David Weisburd?

  That's such an interesting point. In other words, the conviction is built by having a bottoms-up understanding of the business.

• 10:12Speaker 01

  For sure. I think, I don't know another way of doing it because.

• 10:17David Weisburd?

  Everything else is just bravado. Why are you convicted? Well, I know for sure. Why do you know for sure? You have the same information as every other investor.

• 10:23Speaker 01

  Exactly. Exactly. It feels like a lot of talk to me without, without a really deep understanding. And obviously, he's been a close friend of Elon's for such a long time. And Elon's first principles thinking, I think, has spread through the whole ecosystem of Tesla and SpaceX and all the companies he's touched. So I know that it's the way the folks at Valor think and for sure, the way Antonio thinks.

• 10:49David Weisburd?

  Speaking about how people think, you get to see the spatter matching of thousands of LPs, thousands of GPs. You're just seeing this at every conference. If you were a first time fund today, how would you raise capital?

• 11:00Speaker 01

  The first thing I would do is be prepared for it to take a very long time. You shouldn't really get in the game if you're not ready for it to take a long time because it probably will take a long time. It's not an easy business. People want to get to know you. In the beginning, no one has a reason to give you any money or to really test you out. So they want to spend time with you and get to know you. And you have to be prepared for just a very long sales cycle. But if you are prepared for a long sales cycle so that you're like, humans are just so focused on our expectations being met, set your expectations far out into the future.

• 11:41Speaker 01

  And then it's fine to do that and then work really, really hard to exceed that expectation. But I think people who get into the business and think they're going to raise money in three months or six months, or have set themselves up where they're in financial trouble if they don't raise the money in a short period of time, like you're just setting yourself up to lose. So you have to be ready for a long process. And then it's really just a matter of getting out there and being in front of people as many times and as often as possible. Like, we see that the funds that have the most success with us are the ones who commit to multiple events and they're just here every time. And, you know, the first time they walk in the door, it's probably pretty overwhelming.

• 12:25Speaker 01

  You know, we have thousands of people at these things. Tons of LPs and you walk through a room and you can see lots of people know each other. You're probably not going to know many people the first time you're through, but by the third time you're through, you'll probably be looking at your 70th, 80th meeting and a bunch of people who now you've seen multiple times feel like friends. So you just have to go at it with the mentality that I'm a newcomer and I'm privileged to be in this room and I'm going to take time to really get to know people and build relationships and not put kind of undue pressure on them or myself to have to transact right away.

• 13:05Speaker 01

  I mean, in my prior business, which was a hedge fund and just alt fund seeding business, I mean, we talked to investors for years in some cases before they allocated. That's how it goes. And sometimes along the way, you think you're going to get an allocation, then the market does something and it changes everyone's view and now there's another delay. Like, it's a long process. It's honestly, I can't really think of an area of the economy that has a longer sales cycle than this one. And you know, the problem is people hear the handful of stories where, you know, so and so left and they walked out the door

• 13:46Speaker 01

  and a month later they had a billion dollars. Like, okay, it does happen, but it is such a small exception to the norm. I wish people just wouldn't even see those stories.

• 13:57David Weisburd?

  It's availability bias. In startups, you have the same thing. You only see the headlines before, it used to be TechCrunch article would come out and there might be 30 companies that were in that space, but everyone saw this one article and everyone's comparing themselves to this one.

• 14:09Speaker 01

  That's exactly right. Yeah. And then if you look at the guy who raised a billion, yeah, he spent the last 20 years working for Steve Cohen and every, you know, all the LPs knew him and everyone knew and believed in him. So when he walked out the door, he already had all the relationships and the credibility that you're trying to build. Until you build the relationships and the credibility, it's a process.

• 14:34David Weisburd?

  How much of a factor is having an anchor today?

• 14:38Speaker 01

  It's a big one. It's a big one. It's

• 14:41David Weisburd?

  Can you explain that?

• 14:42Speaker 01

  Sure. I mean, an anchor investor is, in essence, the first person who puts money into a fund. And it's important because it's a signal to all the other investors that someone, hopefully, did the work to understand the strategy, to evaluate the manager, and got comfortable that both the manager, management team, and the strategy are worth betting on.

• 15:07Speaker 01

  You really need an anchor to get a fund started because that's the first story that you're going to build on. You're going to go to every other investor that you meet with, and you're going to tell them that you have this anchor, and they're all going to want to hear the story. Why did, how do you know the anchor? Why did this person make the bet on you? They're probably going to want to talk to that person who made the anchor investment. But I would say, for most funds, you shouldn't really

• 15:38Speaker 01

  try to do this. You shouldn't really try to get into the business until you have an anchor. Now, if you were trading in your basement and you turned 100 grand into 10 million or 20 million-

• 15:53David Weisburd?

  It's also GameStop.

• 15:54Speaker 01

  Something. There you go. Right. What was that guy's name? I forget, but yes.

• 15:59David Weisburd?

  Koring Kitty.

• 15:59Speaker 01

  Yes, that's him. That's an anchor investment. Now, it's not going to send the same signal to the other LPs, but at least you have a corpus that you can build on. And you're managing enough money that you're credible, right? Other LPs might not look, they're not going to look at it and say, "Oh, that's the same thing as someone giving you 20 million to manage." But now, as you build your track record and time passes, they're going to look at you managing that money very differently than they are when you were managing, you know, 100 grand in your basement. So, but you know, most people are not in that spot. Most people need to go find an anchor investor.

• 16:41Speaker 01

  And I'd say you want to at least get a very strong indication from someone that you can get that anchor investment before you really make the decision to jump into the business.

• 16:54David Weisburd?

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• 17:38David Weisburd?

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• 18:22David Weisburd?

  news, and more than 240,000 expert call transcripts, turning raw conversations into comparable, auditable insight. Take advantage of AlphaSense AI-led expert calls now. The first to see wins, the rest follow. Learn more at alpha-sense.com/HowIInvest. A lot of GPs are confused by why an anchor is so important. And they fail to realize the most important resource for LPs arguably is not even cash. It's their time. Every LP I've ever talked to has told me that they're understaffed. I've never met an LP that believes they're either fully staffed or overstaffed. And the framework that I have for this is I call it double gated fundraising process.

• 19:05David Weisburd?

  The first gate is do we want to do work on that manager? And then the second gate is, once we've done work, do we invest? I actually think from the second step to the third step, it's a pretty high conversion. Let's call it forty, fifty percent. But from the first to the second gate, it might be a five percent conversion.

• 19:22Speaker 01

  Yeah.

• 19:22David Weisburd?

  And all GPC is, we talk to LPs and two percent of them commit. They don't realize that it's actually a double gated process. And the reason that's all relevant is it's highly rational for LPs to focus their time when they know the fund is going to close. Fund is going to come together and the terms have been decided because they don't want to have to do that all by themselves.

• 19:41Speaker 01

  That's absolutely right, I think. And also, you've got to distinguish between a liquid strategy like in a hedge fund, where the anchor is important from a signaling standpoint. But the fund, you know, assuming they can manage their expenses or they've planned for managing their expenses, probably out of their own pocket. The fund could operate on ten million dollars and build a track record on that. In a private equity structure, like what I think you're describing, it's a totally different ballgame. You're absolutely right. A Jeep or an LP is not going to want to spend time unless they look at it and they see, okay, there's an anchor and it's someone really credible.

• 20:24Speaker 01

  And they are also going to be handicapping. What will other LPs think when they see this anchor? Because that's going to inform what the likelihood is that the fund closes. Because if the fund doesn't close, well, then I just did all this work and all this diligence for nothing. Because they couldn't assemble the rest of the capital to achieve the closing.

• 20:44David Weisburd?

  And the brutal aspect of that is the worse the market, the more the anchor matters. Because the worse the market, the more likely the fund will not close and therefore you need that signal.

• 20:52Speaker 01

  Yeah, that's definitely true. I think we're moving into a much, well, I shouldn't say easier period. It's, I think we're just moving into a period that is going to look more like the historical norm of private market fundraising and capital deployment. It's been a really tough three years, four years for private markets. We talk to LPs all the time and the vast majority of them have told me over the last five years, they have had either neutral or negative cash flow in their private markets portfolio.

• 21:34Speaker 01

  Now their portfolio value has gone up because the investments have done well, but if you don't have liquidity, it's really hard to continue to invest into future vehicles. So they have GPs coming at them where they gave them money in Fund Three and Fund Four and Fund Five, have seen minimal liquidity from those funds. And now the GP is showing up saying, I want you to commit to Fund Six at the same level as you did the last three. And the LPs are saying, you have to start returning capital because I need those cash flows to make these future commitments. So where maybe I did 10 million in the last three, I can only do 5 million now. That conversation has been happening a lot for the last three or four years.

• 22:19Speaker 01

  So I think the SpaceX IPO, the Anthropic IPO, OpenAI, these things hopefully will really jumpstart the IPO market. We have not had a normal IPO market for five or six years. If the IPO market gets back to normal, it's going to be great for public markets, in my opinion, because that influx of liquidity, it's going to also drive a lot more M&A activity, especially these deals happening at trillions of dollars. I think the liquidity coming into private markets will drive much, much more activity than what we've seen. It's been a very hard fundraising period.

• 23:00David Weisburd?

  Is that how you find that LPs think in that? They deploy as DPI comes available in a specific asset class. In other words, even though the public markets might be up 50% in several years, they're not redeploying into private markets until they have DPI?

• 23:18Speaker 01

  No, I wouldn't say that. I think the most sophisticated LPs know that in private markets, a really, really important element is getting capital into each vintage. Because you really need the power of that diversification because there's too many outside factors that impact the performance of these funds. So the managers may be great at generating deal flow and picking the right management teams, but the environment that these businesses are being built in is changing constantly. And you really need to invest in each vintage, in essence, to get the diversification across market conditions.

• 24:03Speaker 01

  Investing in a business that started in, when I think about the dot com era, 1998, 1999, like that vintage probably didn't do so well. But the vintage, a year or two later, did really well because it was just a different market. I mean, think about it right now. Investing in a business that was being valued in the 2021 market, when especially SaaS businesses were like super highly valued, versus investing in a software business now that has AI at its disposal. I mean, those two businesses would just look so different internally.

• 24:43Speaker 01

  A business today requires a fraction of the number of people to accomplish the same amount in terms of code output. You want, as an investor, to be able to catch, you know, you'll need probably today's vintage or maybe last year's vintage to be able to offset. The dynamics of that 2021 cycle. So I think private market investors are thinking much more about making sure they do catch it. Like, I don't think the LPs were saying, I'm going to skip your next fund because I don't have the cash flow. I don't think they want to do that.

• 25:22Speaker 01

  I think they want to be in that next fund, but it just became much more stressful as to how they're going to manage their cash flow to be able to do it.

• 25:31David Weisburd?

  Comes back to the EQ that we talked about before. It seems like being investors shouldn't be that hard. Why? You have a portfolio and on average it goes up. But when people look back on the S and P 500, it returns 10% over 80 years per year.

• 25:50David Weisburd?

  It's hard to internalize that volatility. Sometimes you're up 20, sometimes you're down 30, and that ride is what makes it hard.

• 25:56Speaker 01

  Yes.

• 25:56David Weisburd?

  If you want to invest in something that's predictable, 5, 6%, maybe you do bonds or maybe you do treasuries. But to get that extra 4% or 5% and the S and P and then ventures even more, that some would argue higher beta thing. You really need to have your behavioral dynamics and you really have to have your EQ dialed in. So the sophisticated LPs will not try to do anything overly heroic, will understand their behavioral biases and structure around those.

• 26:24Speaker 01

  It's totally true. Like, when I think about someone like Warren Buffett, Warren was obviously brilliant as an investor and his analytical skills were incredible. But I always was so impressed at his ability to just do the opposite of what everyone else was doing. And until you actually have capital in the market at risk, you don't realize how stressful it is to ride out a bad market and to not sell at the bottom. And like, is, we all read that you're supposed to buy low and sell high. And we all read the worst thing you can do is sell at the top, or I'm sorry, buy at the top and sell at the bottom.

• 27:08Speaker 01

  But yet, so many people still get caught in that trap. It really does take a lot of EQ to be able to like manage your own anxiety around it. And you know, it's different for different people. Obviously, you know, when you're a principal in a family office and it's your capital, that's a different spot than when you're part of an investment team at an endowment or a foundation and you're running someone else's money. And now you're kind of thinking about the career risk of what I'm doing here. Look, I think over the long term, Warren's approach obviously is a, is the way to go, but it is definitely harder said than done.

• 27:51David Weisburd?

  It's like playing poker without real money.

• 27:53Speaker 01

  Yeah, right. Exactly. Like you'll never become a great poker player until you're risking money. It's really fascinating to see how different the experience is. If you just play a game with chips and then the next game you have to put money in to buy those chips. It's a completely different experience because in the second experience, you have to really manage your anxiety. You don't want to lose that money. But if you let your anxiety win, you'll probably make worse decisions.

• 28:27David Weisburd?

  It's become increasingly less difficult for me to deal with these EQ issues. And that's when I listened to Stanley Drunken Miller. I listened to my own podcast and he said, nothing looks as cheap as after it's gone up 40%. And this was arguably the greatest trader or one of the greatest traders in history. And when I realized even Stanley Drunken Miller has to deal with these trading biases, my mind switched from trying to make these heroic trades or even training my brain to react. And I thought of how do I structure my investments and my behavior in such a way that I don't need to out Stanley Drunken Miller, Stanley Drunken Miller.

• 29:09David Weisburd?

  Humble or not, because at least I have some level of humility to know that I will never be able to do that.

• 29:15Speaker 01

  No. You know, that's a high bar. He's been, he's pretty good at what he does.

• 29:22David Weisburd?

  I have this paradoxical belief that a lot of investors should be illiquid in a lot of asset classes. I call the virtue of illiquidity, which is all things being equal, which they're not. But if all things were equal, you'd rather have illiquidity in certain asset classes, including venture or anything with a lot of volatility.

• 29:42Speaker 01

  Mostly because it protects you from making bad decisions.

• 29:45David Weisburd?

  And the more volatile, the more liquid you should be.

• 29:47Speaker 01

  Yeah. No, I think that's true.

• 29:48David Weisburd?

  I learned this from crypto funds. When I would talk to them on camera, they would talk about all their thematic trades and all their contrarian views. And then off camera, they would always say the same thing. Well, I was just really lucky. I was illiquid in this one position. It went up 10x, it went down 2x. And, you know, I ended up being in a levered Bitcoin trade that returned 40x. Everything else, I don't really know what I'm doing. And I kept on hearing this, this meme that illiquidity is what saved them. And finally, I had to switch, which is maybe illiquidity is a good thing.

• 30:19Speaker 01

  I was chatting with someone yesterday, telling them that I, like, I don't really have any public market investments. I'm basically strictly in alternatives, like startup companies I've invested in or funds that are mostly illiquid. And I do find it is an interesting experience to not be able to sell. Like, I've made these bets.

• 30:49David Weisburd?

  It's comforting.

• 30:50Speaker 01

  It kind of is comforting. It's just like, look, it's in their hands. They have to manage it to the best of their ability. I think I've picked smart people as I've made those bets. But

• 31:04Speaker 01

  If I had the same capital sitting in the public market, I know I would be way more tempted to start buying and selling, which probably would be worse for me.

• 31:17David Weisburd?

  Cliff Asness causes volatility laundering. He previously on my podcast, he talked about this concept where private equity doesn't have as much volatility, but that's just because you don't see the volatility on a day to day basis. It actually has the same volatility as the public markets. And my response to that is so what?

• 31:34Speaker 01

  Yeah.

• 31:35David Weisburd?

  That's the thing.

• 31:36Speaker 01

  Yeah.

• 31:36David Weisburd?

  The thing is that you shouldn't be able to trade on daily basis.

• 31:40Speaker 01

  Yeah, we're probably hurting ourselves. I mean, there's not too many people who could trade on a basis and win.

• 31:46David Weisburd?

  One of the hardest things in private markets for LPs to do is to distinguish manager skill versus luck. How does LPs go about doing this?

• 31:57Speaker 01

  Uh, wow, that's a good question. I mean, some of the stories I've heard over the years, I feel like

• 32:06Speaker 01

  they tend to invest in packs. I think that's one way they try and get at it, meaning they're investing in things that other investors that they respect and trust are also investing in.

• 32:19David Weisburd?

  Almost a wisdom of crowds.

• 32:20Speaker 01

  Yes, yeah, exactly.

• 32:23Speaker 01

  In some strategies, you can do the math to try and figure it out, right? To calculate.

• 32:28David Weisburd?

  There's some kind of confidence in our over certain amount of.

• 32:31Speaker 01

  Like in our seeding business years ago, we worked on a strategy with guys who had come up with a way to analyze private banks by comparing them to an equivalent set of public banks. And in the banking space, there were enough really small, similar looking public banks that you actually could get a decent comparison set

• 32:59Speaker 01

  to compare it to the private banks. And they were able to do this alpha analysis, which actually was pretty predictive. It worked reasonably well. But I think in private markets, it's really, really hard to do.

• 33:15Speaker 01

  And I think, I don't think, I don't find that investors are spending a tremendous amount of time, they're certainly not doing it analytically.

• 33:27Speaker 01

  I think they're mostly doing it like you kind of can only do it over a period of time.

• 33:34David Weisburd?

  Which is why LPs have this bias to wait, which a lot of GPs don't understand.

• 33:37Speaker 01

  Yes, they totally have a bias to wait. And I think it's also why they're biased towards picking things that they see their peers picking because it gives them a sense that they're not the sucker at the table. They're not the one betting on someone who actually just got lucky when they see other people. Now, it doesn't always work because if I remember correctly, FTX had the most amazing rock star list of investors. And I think everyone was kind of assuming everyone else had like done the work. But in private markets, I think the only way you can really make that assessment is over you have to look at someone's performance over a longer period of time. Obviously, in the

• 34:20Speaker 01

  public markets, it's easier to do it analytically. But and people are doing it analytically there. But in the private markets, you just kind of have to watch it over time. And because you will figure it out over time. Someone who's really good, you're going to see consistent performance. And someone who just got lucky, you're probably not going to see because you know, there are more the one shot wonders.

• 34:48David Weisburd?

  You were GP seeding years ago. You've seen these GPs play out. What surprised you the most about the GPs that made it?

• 34:56Speaker 01

  I don't know that I was ever really surprised about the GPs who made it. I think the common thread of the GPs who made it is they were also great entrepreneurs. There's

• 35:07David Weisburd?

  Firm builders.

• 35:08Speaker 01

  Yeah, they were not just focused on the trading strategy. They were focused on the trading strategy, the marketing strategy, the brand building, the relationship building.

• 35:20Speaker 01

  Recruiting, they wanted to be entrepreneurs. There's a lot of people who get into the business who probably should be employees in a bigger shop where they show up every day and the Bloomberg is there and the systems work and the internet connection is always reliable and they don't have to get into the weeds on-

• 35:42David Weisburd?

  They probably would be happier.

• 35:44Speaker 01

  I think a lot of-

• 35:45David Weisburd?

  Sometimes richer.

• 35:46Speaker 01

  Yes, I absolutely think that. We saw a lot of people over the years who were great at whatever their trading strategy was, but they didn't have that, they didn't have that entrepreneurial drive. Like, when I started my first business, one of the first things I heard that it's always stuck with me was the CEO has to be the best salesman in the business in the, in the beginning. I've met so many traders who, you know, they don't want to go to networking events, they don't want to go to dinners, they don't want to go to cocktail parties. It's like, well, how are you gonna, how are you ever gonna grow your business if you don't want to spend time with people?

• 36:26Speaker 01

  You know, on the flip side, a guy comes to mind who built his fund business to probably a billion five and had a tremendous amount of success with it. And you could have told this guy there was $5 in London that he might be able to scoop up and he'd be on a plane the next day going to scoop up that $5. And that's the mentality that I think you have to have if you're gonna be successful in this.

• 36:52David Weisburd?

  I'm not gonna ask you to name funds, but are there funds with slightly above-average performance that have built these enduring franchises because they were so good at these other things?

• 37:02Speaker 01

  Oh, 100%, yes.

• 37:03David Weisburd?

  Not one?

• 37:03Speaker 01

  I mean, I've consistently been surprised at how many funds have mediocre performance and they're running tens of billions of dollars. But they were great entrepreneurs. They were really good at building a team. They were great at marketing. They knew the importance of it and they respected it. Like I, my background is engineering and I have to say, there's like, there may not be a career that has more arrogance in it than engineering. Cause like, it's a, it's really hard. You know, the math, I went through the physics, like try learning quantum mechanics and like having to do the math of quantum mechanics. It's brutal.

• 37:44Speaker 01

  When you graduate after getting through a program like that, you know, you think you're smarter than everyone else. And okay, you're pretty smart, right? It's not an easy program to get through. But it doesn't mean that you have the skills to lead, to recruit people, to, there's so many other elements to building a successful business that you don't have any idea about those things. I think the trading world, it reminds me a lot of engineering because they're all super, super smart people. And I think they come out with this thought that if I just am really great at this one thing, everything else will take care of itself. And that's just not true.

• 38:23Speaker 01

  And the guys who maybe were okay at the trading, but really nailed all of the other elements of the business are the guys who are putting up, you know, slightly better than average returns and running billions and billions of dollars.

• 38:40David Weisburd?

  You've had a storied career. What's the hardest truth that you've had to swallow throughout your career and lesson to learn?

• 38:47Speaker 01

  The market, that like, life is unfair. I'll never forget this. I, I was trying to raise, it was in the seeding business. Um, I was trying to raise money from a big public pension fund and it was a really big strategic deal. They were going to allocate somewhere between one and two billion dollars across a whole set of deals that we were working on. And it would have completely changed the trajectory of the business. And the week it was supposed to go to investment committee, the guy who was leading the deal quit. Now, this was a guy, like, great guy, really smart, but he was probably a guy making an average salary, I don't know, call it $150,000 a year.

• 39:31Speaker 01

  And then someone, the asset management firm, probably offered him three times that amount to leave the state pension fund and move over. So he did what made complete sense for him and his family, but it was devastating to the deal that we were working on. So the whole thing collapsed. And I called a friend of mine who was really successful and had been in the business forever, and I was telling him the story, and his answer to me was, "Wow, the public pension fund didn't give me a billion dollars." And I just started cracking up on the phone, as devastated as I was in that moment. It was the funniest thing. And, uh, but that is the reality.

• 40:11Speaker 01

  Like, that is just, all of these things are just elements in a marketplace. And the marketplace doesn't care about your feelings. The marketplace is just functioning, and it's our job to navigate that marketplace. And that is a really, really harsh reality. And if you're not willing to live, like, I have grown to love that reality. Like, I know that's the reality I'm living in. And I, by the way, I live in constant fear that there's something around the corner that I don't know is coming, that's gonna run us over and iConnections will be out of business, like, and it can totally happen. Some percentage of the time, it will happen.

• 40:53Speaker 01

  It's very scary, but I'm at a point where I like knowing that that's the reality, and my job is to protect us and be able to navigate it while still growing as, you know, to the best of my ability. But some people just can't really deal with that reality. And those are people who really are better suited to be employees, because all of it is just too anxiety-producing, too stressful. But I do think that is the harshest reality that I've kind of accepted and learned to deal with.

• 41:29David Weisburd?

  There's nothing more brutal or harsh than the market.

• 41:32Speaker 01

  No.

• 41:33David Weisburd?

  Ron, this has been absolute masterclass. Thanks so much for jumping on.

• 41:36Speaker 01

  Hey, it was great, David. Thanks for being here, man.

• 41:38David Weisburd?

  Thank you.