E328: Why Most Funds Get Rejected in the First Five Minutes

What if the best venture returns come from managers no one else can access? In this episode, I sit down with Jorge Felippe, CEO of Almulla, a Dubai-based single family office, to explore how he builds high-conviction private markets portfolios while managing a multi-generational family and complex governance. Jorge shares why alignment, patience, and process matter more than flashy deals, and how a thoughtful approach to fund selection can capture early-stage alpha without the chaos of direct investing.

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

• 0:00David Weisburd?

  Last time we chatted, you said that we reject most funds before we even see the IRR. What's the main reason why you would reject a fund?

• 0:08Speaker 01

  I would say there are three key reasons. First one is in terms of terms and alignment. Second on governance and third is around the way they are growing. So let's start with the main one for us is the alignment, the importance of alignment, the fee structure, but also the alignment of the GP with the GP commitment. This is for us is a critical figure that we look at as a KPI. And if it's anything below 2%, we reject straight away.

• 0:31David Weisburd?

  So 2% GP commit, absolute minimum. What do you like to see?

• 0:35Speaker 01

  We like to see 10+.

• 0:36David Weisburd?

  10+?

• 0:37Speaker 01

  10+. And we've been in funds that are 30% GP commits. We've been to funds which are 20%. And we really show the skins and game. On the governance side, there's a lot of things that we look for, but it's really how strong the systems are, how the structure is set up for us. We are based in Dubai in UAE. And of course, the tax situation is very favorable to us. So we need to make sure that it's kept throughout the structure of the fund. And finally, we hate funds that just double in size for every vintage. So we are very, we want to see people motivated for the performance and not the fees, on the management fees.

• 1:09David Weisburd?

  At some point, you end up in an asset management business versus an investing business.

• 1:13Speaker 01

  That's right, that's right.

• 1:14David Weisburd?

  Where do you hit that point? Where does a fund start to feel more like it's making money off of management fees versus carry?

• 1:22Speaker 01

  Eventually, it does happen. I think it's just part of how things develop and how funds grow over time. But I think it's really, one of the things we look at is also like who gets the carry. And you have situations when it's only really a very few number of people in the fund that gets that. We don't like it. We like when it's widely distributed across the investment team and also support functions and others. But yeah, I think it's hard to put a number on it. But I think anything above a billion of AUM, it's, measurement fees play a huge role already, right?

• 1:53David Weisburd?

  I'm curious, there's obviously franchises that have grown successfully, that have been able to scale AUM and keep their returns. Founder's Fund comes to mind among other venture firms. What's the common thread between the funds that are able to scale and still generate alpha?

• 2:07Speaker 01

  My view would be that they keep their edge and they keep their focus and their strategy. So there's no strategy drift. They keep doing what they're good at doing. Sometimes they could go up the chain and do bigger ticket sizes. That's one reason why fund sizes can grow.

• 2:22Speaker 01

  But usually, I think those managers have the discipline of keeping with the same focus, the same strategy, and they just repeat that consistently. Consistency is the critical variable here.

• 2:35David Weisburd?

  So if they're doing a non-lead, a smaller check and seed, and suddenly they're trying to lead Series A, that's almost like just a whole different business.

• 2:42Speaker 01

  Exactly. Or they say, "We're going to grow the portfolio size from 10 companies to 50 companies." It's a very different strategy. There are different relationships with the companies.

• 2:52David Weisburd?

  You have to re-underwrite them in the new strategy as if almost you haven't invested before.

• 2:56Speaker 01

  That's right.

• 2:57David Weisburd?

  So you're bullish on emerging managers and even specifically fund ones. While most LPs are not deploying in emerging managers today, why are you so bullish?

• 3:07Speaker 01

  Research shows that the best performing funds are the fund ones. The problem is that there are many of them and only a few of them actually do well. Very few of them will get to Fund 2, 3, 4, and so on and so. So you do get the alpha, you do get the performance, but it's just hard to find them. I think one of the reasons why they work is because it's basically your own shot. If you're doing your Fund 1, it has to work. Otherwise, you don't have the tool.

• 3:28David Weisburd?

  It goes back to the alignment.

• 3:29Speaker 01

  The alignment. Usually, they have very strong pipelines. That's one of the things I noticed with Fund 1s. They've been working on that idea for a number of years, usually. And they would have a very strong pipeline of very high conviction deals that they are ready to do and they just need to raise the money. Of course, that is the hard part for an emerging manager. But I think the pipeline is there, the hungriness is there. They're hungry. It has to work. There's their reputation on the line. And they are fully aligned in terms of performance. Because usually, they are smaller funds and what really matters is the carrying on the management fee.

• 4:02David Weisburd?

  Some of the best venture funds ever were actually not venture funds. They were the personal investment funds of Marc Andreessen, David Sacks, before they became VCs. And one of the reasons for that is they had just come out of the startup network. So they were literally just investing into people that had worked with. But they had long track records of knowing how somebody would be as a portfolio CEOs. And as you go from Fund One to Fund Two, Fund Three, your network actually sometimes starts to age out. Tell me about that.

• 4:25Speaker 01

  You know, I don't have the experience of being on a VC fund myself, but you can see how that happens. You, of course, for Fund One, you take your best contacts, the best network you have. And you, and as you said, those, these people inside out. Because, you know, if you think about venture, especially early stage, you're investing in the person. The idea might even change or pivot later on. But the people are really, you know, they are really what will make sure that investment works. So I think you have a huge advantage as a first time fund, knowing, having that network, coming out of that network is another. So one of the things, strategies we look at is also managers there, although they are the first time fund, but they are either coming from another fund or established platform. Or, as you said, they are coming from that startup ecosystem where they do have the network.

• 5:10David Weisburd?

  So they might not have an institutional track record, but they have a track record working at a previous fund. So they have some attribution.

• 5:15Speaker 01

  Yeah.

• 5:15David Weisburd?

  Or they've been angel investing, they have that track record.

• 5:17Speaker 01

  Exactly. It's always tricky to verify that and to do the audit of the attribution. That's one of the things we look for. You know, the best Fund One performers are also the ones that have that history, either as an Andrew or as a part of a larger platform.

• 5:30David Weisburd?

  I want to double click on that because a lot of people think a track record is a track record. But sometimes history is a little difficult to ascertain who owns what, whose track record is it? Was it the brand? Was it the manager? How do you go about asserting a manager's track record and really figuring out whether it's actually them that achieved these returns?

• 5:51Speaker 01

  We were looking at a hedge fund, not venture, but

• 5:55David Weisburd?

  Yeah.

• 5:55Speaker 01

  You know, a hedge fund that had a 12 year track record, but 10 out of the 12 years, the gentleman was part of a family office and he was running, you know, the same strategy inside a family office with very limited growth, but a phenomenal performance. And, and somehow part of his deal with the family office when he left was that he could take the track record and the full attribution, et cetera. And that was the key question we had, diligence. Is this real or not? Was it him really? Was it the strategy? Is that the same that he's doing? Because then he did for two years on his own as a fund manager. And ultimately, he had a BDO audit report that was shared. And of course, those things can be fabricated. We check with BDO itself if that was a real report, if it was really done. You know, of course, they couldn't tell us if the numbers were, you know, correct or not. It's all confidential.

• 6:40Speaker 01

  But at least they could tell us that, yes, this is a BDO report. It's not a fraud. So that was a real example where we went

• 6:48Speaker 01

  lots of steps to try to really verify and make sure. Because the whole investment idea was predicated that that track record was real. So this is one example. I think overall in VC and funds, we ask for the information. It's very hard to verify if the information given is real. Unless it's coming from, let's say, the person is coming from another fund. And then you can call and verify, is that true? That, you know, he works on this, this, this deal. So that happened once, we did it. But overall, we just have to take a face value, whatever is given. And otherwise, we don't have that many resources as well to go and do all those verifications. I think that particular case of the hedge fund, because we want to do a meaningful ticket. We did an extra mile there.

• 7:29David Weisburd?

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• 8:15David Weisburd?

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• 8:53David Weisburd?

  It's all probabilistic. People, I think, have a hard time understanding that the world in general is probabilistic. You can never know anything for certain, even if it was their tracker. Maybe now they're in a different stage of their life, maybe they just have kids. There's so many variables, you're trying to come to the best possible answer. I've had many conversations with LPs about attribution. I actually think there is a right answer. Most things are a little bit nuanced, but I think if you go, I think the source of truth is the CEO of the portfolio company. Why? If you go to the CEO of the portfolio company, they're going to tell you, A, why they made a decision, who provided the value. Said another way, they're the least corrupted in the entire.

• 9:27Speaker 01

  I'd be surprised with that. I was in a real life situation where I was in a P fund and we had this portfolio company with a CEO and I was very close to him. And he was then given as a reference, you know, for reference checks for other LPs, etc. Or in this particular case, it was another portfolio company that we're looking to acquire. And he gave a very positive feedback and I knew that he wasn't happy with how things were going. There was a lot of micromanagement on the PE side. And then I asked him, why did you lie? Why didn't tell the truth, right? He told me, because if I lie, it means that I did a bad deal. Right? Why did I sell to you, to this particular fund? And it would look bad on me that I chose to give a majority stake.

• 10:12Speaker 01

  And I thought, wow, that is. That is true. It will look bad on him if he says that, you know.

• 10:19David Weisburd?

  So sometimes there are other costs.

• 10:20Speaker 01

  So I think you have to be careful. We have to be careful. We really need to know the person, which in most cases is very difficult, right?

• 10:27David Weisburd?

  I think references are the most underestimated aspect of alpha in investing. Why? Because they're boring, they're hard. We talked about this earlier. But also, a reference is not a reference. You could have two institutional LPs on a single call. Let's say there's a third party asking the questions and they'll have two completely different reads on the reference.

• 10:44Speaker 01

  Sure.

• 10:45David Weisburd?

  There's an art to it.

• 10:46Speaker 01

  True. But among family offices, the beauty of it is that we share a lot of things. So we.

• 10:51David Weisburd?

  The incentives are aligned.

• 10:52Speaker 01

  And we're not competing with each other. We're not competing for deals. We're not competing for allocation in funds. And if you ask a family office, even if you don't know the CIO or CEO very well, they will give you, I think, in most cases, an honest answer. You're right. You might hear different answers from the same manager. One likes, one doesn't, which makes it hard in many ways. But at least, you know, the network is so strong that people are very open to share and give their honest opinion.

• 11:17David Weisburd?

  Double click on that. I think family offices to 99.99% of the world are this very opaque secretive community of essentially billionaires. Talk to me about how family offices work with each other and where there are areas for collaboration. Is there areas where there's competition as well?

• 11:32Speaker 01

  There's this myth that family offices do club deals or invest together. And I think this is really the minority of the cases. I think in most cases, the collaboration is purely sharing, you know, opportunities, things that they like or they don't like. Referencing is super powerful.

• 11:49Speaker 01

  And I think overall, people are always very open to disclose it. I think it's very different, for example, with sovereigns. They don't share anything. But family offices are very open to share. And in a lot of cases, you know, I don't see cases of competition, to be honest. I think because you might have that in families that like to do direct deals. And of course, you have limited capacity, you have limited access. But that's not what we do. So I think, you know, that could be one situation where there is competition among family offices. But in general, there isn't.

• 12:18David Weisburd?

  You had this internal discussion whether you should do direct deals or not. You decided not to do direct deals. Why is that?

• 12:24Speaker 01

  We see direct deals not as a NASA class, but as a capability. So unless you have the capabilities to do it, you know, you shouldn't do it because it takes a lot of effort. It takes a lot of bandwidth across, you know, among the team. And because they are single name checks, you have to size the check very well. So usually you have to do smaller checks. And that creates a problem because you do all this work. And then at the end, you write a very small check. So we rather do funds where, you know, you have also a lot of work to diligence. And but once a fund is selected, then you have, you can size it well. The other thing is the complexity to monitor and track a direct deal. It is very hard to get the information from the companies.

• 13:06Speaker 01

  It's very hard to aggregate those things to keep a close eye on it. And we do, for example, an audit. We need to have the numbers for December. And, you know, and there's always a pressure, like, when is the audit coming out, etc. So directs are a headache in that sense. You have no control also around the exit timing. Usually they always say, oh, it's going to be the next 16 to 24 months.

• 13:28David Weisburd?

  Yeah.

• 13:28Speaker 01

  And it never happens.

• 13:29David Weisburd?

  Always.

• 13:29Speaker 01

  It never happens.

• 13:30David Weisburd?

  I used to hear 18 to 24 months, but I guess it's now 16.

• 13:32Speaker 01

  Yeah, it's, you know, it's tough. It's tough. And then, and you have such a small stake that you don't even have access to the company itself. So in our case, we only do directs if there is a real reason for us to be on the cap table. And in most cases will be, and we've done one or two where the company actually wanted to expand in Dubai or the UAE.

• 13:47David Weisburd?

  You have a right to win it.

• 13:48Speaker 01

  Exactly. Because, and especially like what we say, especially in the least, is that if a deal gets to my desk, it's because it came to all the desks in New York and LA, Miami and Europe and London.

• 13:58David Weisburd?

  In the Middle East, UAE, Saudi, they're really focused on being the first call. Do you think that's evolving now that the Middle East is getting the first call on these because of the size of the checks? Or do you think they're still kind of second to the US?

• 14:11Speaker 01

  I think they're second. I think maybe the exception could be the sovereign funds because they have a lot of firepower and they have a lot of capital to deploy big checks. So I'm sure they are getting first calls for some of the strategic deals. And you see that happening, right? But for family offices, definitely not. Definitely not.

• 14:28David Weisburd?

  Speaking of fund investing, you just recently changed your investment policy to invest in the final close only. Talk to me about that.

• 14:35Speaker 01

  This came out of our portfolio four years ago, when I joined the firm, at zero private markets allocation, only real estate, but nothing on PE, venture, private credit, and we started deploying. And what we noticed is that a lot of the funds will take a long time to come to their fundraising end, the final close. During this entire period, they use facilities and they would not call any capital. So there was one particular case where for two years, we had 5% of the capital called, basically just to pay the measurement fee. And the principles, the mentality is like, once you make an investment, the money goes out of the door, you start accumulating all the returns, you get distributions, et cetera, et cetera. And of course, when you pitch, let's say, a private equity fund,

• 15:20Speaker 01

  you're saying, oh, we're going to get 20% IRR. And then when you report on a monthly basis and you see that the IRR is minus 5, minus 10, minus... Of course, it's a J curve, which is in itself a hard one to explain and to accept.

• 15:34David Weisburd?

  You must feel it. It's hard to internalize until you feel it.

• 15:36Speaker 01

  Exactly. And for someone that never done it before, they start asking questions. Is the manager doing anything at all? Are they just sitting on the commitment and not doing deals? And then you explain, no, they are, but they are borrowing money. Why are they borrowing money for that? Why are we paying interest on this? And again, the capital, it creates a cash drag in the portfolio because we have that cash, let's say, we commit 10 million. You'd think about, okay, 2.5 million a year.

• 16:01David Weisburd?

  Four-year capital call schedule.

• 16:03Speaker 01

  Exactly. So this 2.5 million, I cannot have to keep almost like cash or quasi cash.

• 16:10David Weisburd?

  Why is that? Can't you put that money and put it in public securities? Typically, you have 10 days for a capital call to call in your money. Why not just put it into S and P 500 or MSCI or something like that?

• 16:20Speaker 01

  The reason is because we have an SAA, a strategic asset allocation, where we have an equity target. Our case, for example, is around 25%. And if I take this 2.5 million and put in there, that 25 will go up. So I would be unbalanced.

• 16:34David Weisburd?

  You'll be over allocated.

• 16:36Speaker 01

  Exactly. And again, we have our equity allocation, so I don't want to have to use that cash, the committed capital for that. So that's why we changed to final close, because then, at least in most cases, very quickly, you get that sort of 25, 30% of the of the fund out of the commitment, out of the door very quickly. The other advantage is that because we are targeting, you know, a high concentration on private markets, the quicker we deploy, the better. So velocity is also important to us.

• 17:03David Weisburd?

  You want your capital to work.

• 17:04Speaker 01

  Exactly. We like, for example, evergreen funds. They are beautiful because of that, because you go straight. There's one capital call, some manager capital calls are another headache.

• 17:11David Weisburd?

  Yes.

• 17:12Speaker 01

  So you have one capital call, the money is out of the door, and you start accumulating. That's one reason why we also been doing a lot of evergreen.

• 17:18David Weisburd?

  I've had pension funds on a podcast that are investing into evergreen funds because of this cash drag.

• 17:22Speaker 01

  Yeah.

• 17:23David Weisburd?

  They realize that that 200, 300 basis points they could get per year is actually alpha.

• 17:27Speaker 01

  And if you think in the long term, because you're 100% invested, if you think about a 10-year period, you know, comparing to the traditional fund where, you know, you at best, on average, 60% invested, you need a much lower IRR on the evergreen. I think the metrics are like, to get a 2X, you need a 9% or 10% IRR versus a 20 in the in the traditional private equity fund. So it's a huge, half the half the IRR gets you the same MOIC.

• 17:52David Weisburd?

  This goes really at the heart of incentives of private equity and to somewhat venture managers, which is they want to boost their IRR, which is why they're using the strategy. They're not doing it to annoy the LP. They're doing it because they want to show a higher IRR when they go out to fundraise for their next fund.

• 18:08Speaker 01

  That's right. That's why that's why they use it. That's why, you know, IRR for us is not a key variable. It is important, but we like MOIC. We like, you know, the DPI, of course, you know, track record on that is very important. You know, you have situations where you have funds, you know, back to the VC world, where, you know, it is a 2017, you know, 2018, 2020 fund with zero DPI, you know, it's a massive red flag for us. You know, how can in seven years, they couldn't distribute a single dollar? It's not a good sign, right?

• 18:37David Weisburd?

  I had Alex Ambrose from the Allocator Training Institute. He was formerly at Cleveland Clinic and a bunch of other institutions. And he gave me the stat, 50%, 5-0 funds of the 2000 vintage are under 0.1 x DPI. 5-0.

• 18:49Speaker 01

  Wow.

• 18:50David Weisburd?

  So you have a 50, you have heads or tails, whether your fund that you invested six years ago has returned less than 10%.

• 18:55Speaker 01

  Yeah, exactly.

• 18:57David Weisburd?

  What are the downstream consequences for endowment makes sense? They have to pay tuition, they have to do all these things. What are downstream consequences for family offices when they don't get their capital back?

• 19:07Speaker 01

  We're fortunate that we have capital inflows coming every year. The family still has, you know, they still own operating businesses that generate dividends. I'm not involved in those, but they do get this inflows every, every year. So we don't have a problem that, you know, we have to have a self-funded portfolio, which I think most of the endowments have.

• 19:23David Weisburd?

  Yep.

• 19:23Speaker 01

  So in that sense, we are okay. We are patient, you know, we don't, we don't have that pressure that we need a DPI to fund uncommitted, you know, the, to fund the commitments. But I think for someone that, you know, endowments are classic case where by design, they built a self-funded portfolio, they're definitely in trouble, right? Their capital doesn't come, they cannot, they can't.

• 19:42David Weisburd?

  The David Swensen Yale model assumed a 25% DPI per year. 2024, we had 9%, 2020, which was the lowest, I think, since 2000. 2025, we had between 9 and 10%. It's not yet finalized and that's the exact, that's the new. So two and a half times less liquidity than the model suggested. And that's just having all these problems in terms of liquidity, in terms of asset allocation. So it's a huge.

• 20:03Speaker 01

  Creates a good opportunity on secondaries.

• 20:05David Weisburd?

  Yes, tell me about that.

• 20:06Speaker 01

  It's something we like as well as a diversifier, but also because we started investing four years ago, it's great to have access to secondary so we can get a 2000, 2000, you know, sort of, not 2000, 2020, 2021, you know, 18, 19 vintages, which again, secondaries also have a role in terms of generating DPI quicker. So we like that as well. So it's an opportunity, we like it. It's a huge diversifier for, for our portfolio.

• 20:31David Weisburd?

  I obviously love venture, but a strategy is only as good as you could apply. And if you're not getting DPI to your year eight, the worst thing that happens is people stop investing to venture. The venture is something that you have to stay in. If you're in a good fund and you miss a fund, you're, you're in the penalty box forever. So having that mitigated J curve could really keep you in the game, which is the most important thing.

• 20:48Speaker 01

  That's right, that's right.

• 20:51David Weisburd?

  Speaking of venture, you have a barbell approach to investing in venture. Tell me about your investments.

• 20:56Speaker 01

  On one side, we like early stage, either through emerging managers or established managers as well. And we like the pre-IPO. So one is really for the true potential of venture, like a lot of potential investments that you have from early stage that can really return the fund. And on the other hand, we have this pre-IPO approach where you're investing companies that don't have the market fit, the challenge, that are already generating revenue, so a lot of times profitable.

• 21:20David Weisburd?

  The cream of the crop, kind of like the private max.

• 21:23Speaker 01

  That's true. It's also a great way to, as you're thinking, the stakeholders I have to manage, a lot of them like direct deals. They all want to be in the exciting names.

• 21:32David Weisburd?

  SpaceX, Anthropic, OpenAI.

• 21:33Speaker 01

  You name it. So doing a pre-IPO fund is a great way to get access to all of those with a diversified approach and having, hopefully, a fund life which is much shorter.

• 21:46David Weisburd?

  You're telling me you invested in a fund with a two-year investment period and a six-year total fund?

• 21:52Speaker 01

  Four years, yeah, six years.

• 21:53David Weisburd?

  Four-year harvesting.

• 21:54Speaker 01

  Two plus four, yeah.

• 21:55David Weisburd?

  Do you see the venture capital model changing from a 10-year to an eight-year?

• 21:59Speaker 01

  The early stage is very difficult.

• 22:03David Weisburd?

  It's going from 10 to 14?

• 22:04Speaker 01

  Yes, it's actually going the opposite way. So I don't think it will. I don't think it will. I think it's, one of the challenges is exactly that companies are staying private longer. So the pre-IPO or the growth funds or the, they have the winners funds, those sort of vehicles, I think these are going to grow because these companies are not going to the public market and people want to have access to them. So these are ways to get this access. Of course, they're all access constrained. So I think that would be something that I see a trend of more and more funds in that space, so either the CoCo Invest, the winners, the pre-IPOs, et cetera.

• 22:44David Weisburd?

  And you're accessing early-stage managers in a fund of fund. So, fund of fund is somewhat of a dirty term and it implies you don't have access. But you've chosen to use a fund of fund around fund ones. Tell me about that.

• 22:55Speaker 01

  Again, going back to the idea that, you know, fund ones do perform better, but it's hard to find them, you know? Who is best placed to find them? Someone that has access and knows a lot of them. And look at hundreds of them and then choose the best 10, 12, 15 funds. So that was the approach we took and said, listen, this is an elegant solution for that. We have one fund, so it's one capital call cycle, et cetera. You, of course, you have to trust the manager that you'll be able to sort of source or identify who will be the winners. But then you have access to 15 different funds that you'll never invest by yourself. So many. So I thought it was a good way to get that sort of early-stage.

• 23:39David Weisburd?

  Kind of have this double-edged sword in fund ones where they are the best returning, but sometimes they do really bad, sometimes they do really good. You have the spikiness with a fund, you're able to flatten that and capture some alpha.

• 23:48Speaker 01

  Yeah, that's the goal. That's the goal. We'll see how it goes. It's early, still a few years in, so it's performing well, but it's, you know, you need to wait at least seven years to get a good picture. So we'll see how it goes. But it was one strategy that we thought very contrarian to do both a fund of funds with a merger.

• 24:03David Weisburd?

  It's a low ego way to capture alpha. A lot of people, to your point, the opposite of fund of fund is doing the direct deal, doing the SpaceX and the 220 SPV and the 220 SPV. That's very sexy, probably not the best strategy. Doing a fund of funds is not very sexy. It's a humble way, but it's a way to capture early-stage alpha. You came from the private equity world and you joined Amola four years ago with your single-family office. What have been your learnings about being the CEO and CIO of a family office?

• 24:28Speaker 01

  I underestimated how challenges to manage your different stakeholders because you have very different stakeholders, very different interests. Family and money are things that don't make so well.

• 24:39David Weisburd?

  Yeah.

• 24:40Speaker 01

  To be very honest. And there is a whole. The investment part is the classic, the CIO role. But the CEO role is quite interesting as well. Like, you have to think about their philanthropic efforts, their art collection and how you manage that. Things that I never have done myself in the past. So you learn a lot, which is great. Governance is a huge topic, right? You have to, you know, a family office, particularly in my case, it was already established, but they didn't have a proper governance framework.

• 25:08David Weisburd?

  How many generations are you dealing with?

• 25:10Speaker 01

  So I'm dealing with two. And there is an ongoing effort to engage the next gen, the third generation. But they're still high school, undergrad age. So we started engaging with them. And it was also very interesting. But definitely like two generations is the.

• 25:26David Weisburd?

  Taking off your Almula hat, just in general, for single family offices, what are some best practices for establishing the best governance?

• 25:32Speaker 01

  You have to start from having a very clear mission and vision. You won't believe how many family offices don't have that. And.

• 25:40David Weisburd?

  Why do you exist?

• 25:41Speaker 01

  Exactly. Why you exist, what you want to achieve, right? It's so important to have that clarity. What's your goal, right? Are you looking for capital preservation? Are you looking for growth? Are you looking? Do you need the money for your expenses? Or are you, right? So there's so many things which are so important. And I think the governance, it's very important to. It was interesting, someone told me that and it was true, that the most important is not where you get to, but the journey to get there. You could have beautiful documents and bylaws and charters and all of it. But the most important is engaging the family on building these documents. And I remember telling them that, you know, you need consensus. And consensus doesn't mean you agree to something, but you accept it.

• 26:23David Weisburd?

  Yeah.

• 26:24Speaker 01

  Right?

• 26:24David Weisburd?

  Disagree and commit.

• 26:26Speaker 01

  And it's so important. And the only way to do that is by bringing the family together through, you know, extended periods of time, through extended length of time, so that they can digest, mature, reflect. And then you build the consensus around it because, you know. For sure, not everyone will be happy with the outcome. But at least because they were part of that journey, they would accept it. Right? And this is so important because, you know, a lot of family offices, the main goal is that they will keep that for generations to come, and it's not usually what happens. So governance and building that process together as a family is so vital. And in our case, we spent nine months doing that. And it was worth it.

• 27:06David Weisburd?

  Tell me about that process.

• 27:07Speaker 01

  Started with a vision and mission, you know, the very basic. How do you articulate that? What do you want, et cetera? What do you see yourself? And then, you know, structuring that, you know, we did a a whole new structure of the IFC Foundation in EOE. And we created a family office as a separate entity that manages the assets of the foundation. So that again was a whole effort. And then you have to create your charter, your bylaws, you know, your board, your family council, your investment committee. None of that was properly established before. And the process, as I said, is really bringing the family members together. You know, the key, you know, the first and second gen that need to be on board and build the consensus that this is how it's going to work.

• 27:51Speaker 01

  This is how it's going to work on the event of succession. Nobody likes to talk about it. But it's the one thing that you know for sure is going to happen. Succession sooner or later will happen. And how are you going to deal with it? And so we, you know, it was quite an interesting, you know, and you as an outsider, you have an advantage that, you know, you're now part of the family. I think it would be very difficult to do just among family members. But having an outsider facilitating the process, I think, helps.

• 28:16David Weisburd?

  There's obviously challenges in working within a family office, just like there is in endowment pension fund foundations. If you look at the capital markets and you're competing with other types of LPs, where do family offices have an edge?

• 28:29Speaker 01

  Family offices, I think they are more patient and they are more flexible and they are easier to deal with as well. So I think those three things are very important. So starting from the last one, you know, our diligence process is much simpler. You know, we, we don't have consultants, we don't have third parties going with 200 DDQ questionnaire and all of that. So I think it's a lot easier to deal with a family office than a large institutional investor. Then on the flexibility, again, we are very flexible, like we, you know, from a geographical point of view, from a strategy point of view. You have institutionals that they just want to do German real estate. So if your fund does one deal outside of that, ah, no, no, no, you're not. So I think that flexibility is something that we have.

• 29:14Speaker 01

  And I think it's valuable for managers. And I think the long term, the patience, I think is also something that female officers do have. There is a long term patient capital. It doesn't mean that we'll be accepting underperformance for a long time. But the view and every manager we invest, we're not just investing in that particular fund. But the idea is to invest for the longest term possible, right? In the next fund and the following and so on and so forth. We don't want to have too many managers. We don't want to have too much complexity in the portfolio. So if you find a manager that delivers in that strategy, usually at maximum, we're going to have two managers per strategy. So that's how we see it.

• 29:53David Weisburd?

  If you go back to 2008 and just graduated London Business School, and you could give younger George one piece of timeless advice that would have either accelerated your career or helped you avoid costly mistakes, what would be that one piece of advice?

• 30:05Speaker 01

  Focus on your strengths and work with people that you like and that complement your strengths. Absolutely, so important. Life is so short. Don't work with people you don't like. Don't try to force yourself to be good at things that you're just not naturally good at. I think that would be my advice.

• 30:24David Weisburd?

  People have this tendency to focus on their weaknesses. Do you think that's downstream of the school system? What is that?

• 30:32Speaker 01

  I think it is. It's, you know, I work for BCG and it's a typical case. Like even in the interview, let's say I'm interviewing you, David, and you're not very good at maths. We have this, one of the criteria, your numbers, etc. What I'm going to do in the next round, I'm going to tell the interviewer for the next round that, oh, he's not very good at maths, so you have to scrutinize his maths. And if you don't do well, it's a fail. So, and when you join is the same thing. You know, you have your strengths, you have your weaknesses. The focus is always like, oh, okay, we have to fix those weaknesses. Instead of, okay, how can we take advantage of your strengths? And I think that's the corporate world. I think academic world is similar as well, right? And it's a big mistake, yeah, it's a big mistake. I think it should definitely, people can go much further if they focus on the strengths.

• 31:17Speaker 01

  And of course, if, and the beauty of being aware of your weaknesses is that, as I said, you work with people that can complement your weaknesses. And then together you achieve much more.

• 31:26David Weisburd?

  As you get older, you start to have more confidence, you start to accept your weaknesses. And for a while, it's like hard to accept them. And you're afraid that somebody might be like, you're not good at math, even if you're good at something much more valuable.

• 31:37Speaker 01

  We also realize like our limits, I think, as you get older.

• 31:40David Weisburd?

  Yeah.

• 31:42Speaker 01

  And you have to deal with that, right?

• 31:45David Weisburd?

  What is your superpower?

• 31:46Speaker 01

  My superpower?

• 31:49Speaker 01

  You know, I think I have a very, you know, I have a high emotional intelligence. I think that helps me a lot in building connections and working with people. I can really understand the other side and I'm not a bully, the pushy, the alpha that tries to always get my way.

• 32:06David Weisburd?

  And not a zero-sum thinker?

• 32:07Speaker 01

  Yeah.

• 32:08David Weisburd?

  Well, not no. Thank you, Eye Connections, for hosting us. Thank you so much, George, for coming on and looking forward to doing this again soon.

• 32:14Speaker 01

  Pleasure.

• 32:15David Weisburd?

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