Senior Decision Makers: Erlina Yeo Terwelp, Columbia Investment Management Company (EP.520)

Our next guest on the Senior Decision Makers series is Erlina Yeo Terwelp, a Managing Director at Columbia Investment Management Company, where she oversees the endowment's private markets portfolio. Erlina's path spans investment banking, private equity, growth equity, and family office investing before she joined Columbia nearly a decade ago. Our conversation covers her evolution as an allocator, how she thinks about manager selection and portfolio construction, the growing role of leadership and team development in her seat, and her perspective on generalist versus specialist team models after working within both. Erlina is candid, thoughtful, and funny — with a deep commitment to intellectual honesty, an openness to changing her mind, and a willingness to continually put herself in situations that force her to grow. Learn more about Juniper Square here https://www.junipersquare.com/. Learn More Follow Ted on X at @tseides https://twitter.com/tseides?lang=en or LinkedIn https://www.linkedin.com/in/tedseides/ Subscribe to the mailing list https://capitalallocators.com/ Access Transcript with Premium Membership https://capitalallocators.com/signup Editing and post-production work for this episode was provided by The Podcast Consultant (⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://thepodcastconsultant.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ https://thepodcastconsultant.com/)

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

• 0:00Speaker 00

  I don't think there is huge difference in the fundamentals of what you're looking at between a business and a manager. All managers need to look at their firms as businesses as well. Betrock of what we did as a generalist was that every investment opportunity was evaluated in its cleanest forms, which was what's its equity beta, what's the liquidity and what's the cost of that and what's its leverage. Not necessarily, do we want an India VC manager? Or do we want a X type of manager? It was very little bucket filling. It was a bottoms up, first principles of what an investment was. I belong to the school where I believe that there's probably five things unique to every investment that will make or break the deal,

• 0:42Speaker 00

  or make or break the returns. We try to get to those questions in a five-page air.

• 0:53Ted Seides?

  I'm Ted Seides, and this is Capital Allocators. The CIOs of the largest pools of capital have jobs that require broad skillsets. They cover the world across asset classes and strategies, determine portfolio construction, and decide what goes into their portfolio. They're also leaders, managing people in an investment office, working with the board, and taking care of all their stakeholders, whether students, grantees, pensioners, family members, insured recipients, or sovereign states. It's a complex role that involves far more than just investing.

• 1:34Ted Seides?

  But they don't do it alone. Behind every successful CIO is a talented team who focuses most, if not all, of their time on investing. We've spent time with many of these senior decision makers at our summits and find they're closest to the action and deeply insightful about investment opportunities and the investment process. This mini-series, Senior Decision Makers, features conversations with investors that have not yet ascended to the CIO seat. These professionals are the primary driver of decisions that lead new ideas into a portfolio or exits from a manager's strategy and are at a fascinating point in their career. My

• 2:19Ted Seides?

  partner and the CEO of Capital Allocators, Hank Sturmac, will take the mic and lead an exploration of the investment thinking and role of senior decision makers.

• 2:32Speaker 02

  Our next guest on the Senior Decision Maker series is Erlina Yo Terwelp, a managing director at Columbia Investment Management Company, where she oversees the endowment's private markets portfolio. Erlina's path spans investment banking, private equity, growth equity, and family office investing before she joined Columbia nearly a decade ago. Our conversation covers her evolution as an allocator, how she thinks about manager selection and portfolio construction, the growing role of leadership and team development in her seat, and her perspectives on generalist versus specialist team models after working within both. Erlina is candid, thoughtful, and very funny, with a deep commitment to intellectual honesty, an openness to changing her mind, and a willingness to continually put herself in

• 3:13Speaker 02

  situations that force her to grow. Before we get to the interview, AI voice cloning has gotten scary good. Apparently, mine has too. I've hosted the first few interviews in our new Senior Decision Maker series, and you're about to hear the next. The funny part is, I've now had multiple people tell me they had no idea it was me behind the mic. They thought they were listening to Ted the entire time. Recently, I was on a call and someone told me how much they liked Ted's conversation with Nick Sisco at Trinity Wall Street. I interviewed Nick. I didn't have the heart to correct them. While AI keeps improving, apparently my Ted voice is right there with it. So tell your colleagues about the latest Senior Decision Maker episode. No need to tell them who's hosting. Let them decide if it's me, Ted, or AI. Thanks so much for spreading the word.

• 3:59Ted Seides?

  Capital Allocators is brought to you by AlphaSense. Here's something for you. Most AI tools today are very good at sounding right. But can you actually trace it back to a filing, transcript, or specific passage that drove the answer? Or are you just trusting the confidence of the output? For allocators, that's not a minor concern. A missed filing, incorrect source, or context that gets lost somewhere in the retrieval chain aren't edge cases. They're how decisions go wrong. AlphaSense is the AI platform built specifically for

• 4:38Ted Seides?

  this. They own the content, over 500 million curated documents, from broker research and expert transcripts to filings and earnings calls. And they own the retrieval layer on top of it. That means every answer can link back to an exact verifiable source, because the answer is only as good as what's underneath it. And with AlphaSense, you know exactly what that is. See it for yourself. Try a free trial at alphasense.com/capital. That's alphasense.com with a hyphen in the middle slash capital. Capital Allocators is also brought to you by Morningstar.

• 5:20Ted Seides?

  In a sea of data, you need to know what you can trust. Morningstar's data, analytics, and research helps bring clarity across public and private markets, connecting independent research and data into the tools and AI platforms you use every day, so insights are easier to spot and act on. Morningstar, nothing in your way. Visit morningstar.com/gameon to learn more. Capital Allocators is also brought to you by Juniper Square, the operations partner trusted by the leading private market GPs. One theme that keeps coming up on the show is GPs that build the strongest and most durable relationships with LPs are the ones

• 6:03Ted Seides?

  that have both strong returns and strong operations. AI raises the stakes on operations, and having Juniper Square as your operations partner helps ensure your data is organized, accurate, and accessible, so you can unlock operational alpha. That's why thousands of GPs trust Juniper Square. Learn more at junipersquare.com/capitalallocators.

• 6:30Speaker 02

  Please enjoy the next conversation in our Senior Decision Maker series with Erlina Yo Turwell.

• 6:38Speaker 02

  Erlina, thanks so much for doing this.

• 6:40Speaker 00

  Thank you for having me.

• 6:41Speaker 02

  I want to start with a question that we use as an icebreaker at some of our summits. Tell us where you grew up and how that upbringing has informed who you are today.

• 6:56Speaker 00

  I grew up in Singapore. I spent 18 years of my life in Singapore. My father was a commodities trader. He did that for more than three decades. My mom has a doctorate in organizational behavior, ran her own consulting firm. When people ask me about my upbringing, it was such a yin and yang. My dad was tactical, direct, brought everything you would expect a trader to be. My mom, who is strategic and psychoanalyzes everybody that she knows, including the three kids, grew up knowing my mayor's bricks, knowing what I stood.

• 7:35Speaker 02

  How does that yin and yang come through today at this stage of your life and professional career?

• 7:41Speaker 00

  This job brought it together for me. You have two voices in your head, and sometimes contradictory, this long-term, short-term. How do I tell somebody something directly? How do I couch it in a way that they understand in an empathetic way? In this job specifically, there is a lot of dynamic decisions that you have to make around different investment opportunities, around trade-offs, around risk and return profiles. My dad's side of things where he thinks a lot in, what do you buy something for? What is it worth? Can you sell it? What's the risk profile around that? That's always been part of my DNA. That comes deeply for me in this particular job. My mom's side of things is about people.

• 8:23Speaker 00

  The people side of things is such an important part of this business. Everything that we see is human capital. Understanding both sides, having been brought up in this environment, was interesting for me.

• 8:35Speaker 02

  What was your entry into the investment business?

• 8:38Speaker 00

  From a very young age, I was introduced to the idea of business and trading because of what my dad did. He was a fan of Warren Buffett. There were books lying around the house about investing. When I was in high school, economics was by far my favorite topic. It was the arts and signs. It's about psychology as much as it is about business and understanding microeconomics. When I first picked up an investing book and started learning about economics, I thought it was such a great combination of everything that I loved, which was literature, math, history. I applied early to Columbia. It was the one university that I wanted to go to because of its proximity to New York and the finance

• 9:19Speaker 00

  industry. I just loved the Renaissance man-woman type of education where you've got to learn a lot of different things about everything. My first foray into the investment world was my first job at investment banking at Citi, but started way before that. I had a big curiosity around that industry.

• 9:39Speaker 02

  What was the path from Citi?

• 9:41Speaker 00

  I graduated in 2006. 2006 was a great year. We were doing the biggest LBO deals that were out there. I was in a consumer group, worked on things like the KKR Dollar General LBO, and everyone was so happy. It was an euphoric moment. It was an interesting contrast because the next year, being in banking and particularly Citigroup, was an interesting place to be. It was very early career trauma, the top of the top. Then the next year, you get the rock pulled out from under. It introduced a lot of paranoia. I decided to go work at Cataton, which was at that time a lower middle market firm, specializing in consumer. Cataton was an exceptional place.

• 10:25Speaker 00

  I still have great mentors from there. They were different in the sense that early on, they were operationally focused. I worked a ton with the CEOs and CFOs of our portfolio companies. From there, I went to business school for a couple of years, worked for a quick stint at a Fund One growth equity shop before I moved to Houston. I moved to Houston for the oldest story known to mankind, which is love. My husband, who was then my fiance, went to medical school. A little later in life, I went to Houston for four years. At that time, there was no working remote. There was no Zooms, and I was relatively young and decided to just move to Houston, not knowing that many people. I had to very sadly quit my job.

• 11:09Speaker 00

  When I got to Houston, I cold called a ton of people, eventually found a place at a family office there. When I got to the family office, I was able to consider optionality there. They asked me to step in as the interim CFO for a company of one of the families for about six months. It was a bit of a turnaround situation. I went in and did all the things that Camden had taught me around operations, KPIs, thought about the things that they could do to drive sales or increase margins. We ended up putting in a new president. I was able to apply a playbook to a company that was further away from the New York private equity scene. Concurrently, I was asked to take a look at the alternatives portfolio as well,

• 11:52Speaker 00

  which at that time included all of the above asset classes. We did a lot of hedge funds. We did a lot of long only. We also were starting the private side of things. There was a lot of directs down there, so I worked primarily on directs with direct companies on the VC and real estate side. Then we did a couple of funds. It was almost a direct flip of what I had been doing before because I was looking at a lot of different types of investments and a much bigger skill than I had before. That's when I fell in love with the LP world. I thought it was so fascinating.

• 12:26Speaker 02

  What was fascinating about it?

• 12:28Speaker 00

  You can walk into your office every day and think the world's your oyster. How do you make my so many different types of strategies and different geographies and different sectors? It's a different proposition than walking into your office every day and having a mandate where you had to buy a consumer company that was X size and that did X things. The broadness of the opportunity set was fascinating. I've met such interesting people and some of the best minds in financial industry. Amazing educational experience for someone who's curious.

• 13:02Speaker 02

  What was the transition from the family office world to the endowment world?

• 13:06Speaker 00

  I moved back to New York after four years in Houston, did the same thing where I cold called a bunch of people. My response rate was maybe 10%. You could count them with your fingers.

• 13:19Speaker 00

  Funnily enough, three of the people who responded to me were Peter Howen and Tim Donahue, who at that time led the Columbia Endowment. I said, why don't you come on in and we'll chat and see if there's an opportunity here. The other person who responded to me was Kim Liu. I met her early on in my career. I thought it was so great that she responded and gave me a 30-minute slot in my calendar.

• 13:41Speaker 02

  Why do you think Tim, Peter, and Kim replied to your cold calls?

• 13:48Speaker 00

  When I wrote to them, I said, here's my background. This is why I'm interested in your organization. For Columbia, it was an easy one. I had gone there. Education was super important to me. My parents were both scholarship holders. I wrote about why the institution was important to me as well. It did the same for Kim. She and I had both gone to the same business school. I tried to leverage that as well. I always catch this an opportunity to connect and learn, which is valuable in the two times that I've had to switch jobs by cold calling. I have met so many people that I have been so intrigued by and have continued to be friends of the industry throughout the whole time. I never thought of any of those opportunities as a transactional one.

• 14:33Speaker 00

  It was more, I value what your organization does. I value what your position is. If you find me interesting as a person for your group, that's great.

• 14:44Speaker 02

  What was the process of Tim and Peter answering a cold call to then you joining the endowment?

• 14:52Speaker 00

  I was applying for the position and it had already been filled, which I did not at that time know. When they responded, they said, hopefully we could chat, come by the office. Back then, my resume was off kilter. It wasn't the standard endowment resume. I had been in a lot of different places. Tim and Peter valued that. At that time, Columbia had a lot of people who had come from a lot of different places as well. I went through an entire interview process. I met with them 10 times, and I was living in Houston then, so we'd had to fly back and forth to do that. Thankfully, I joined Columbia about nine years ago.

• 15:27Speaker 02

  What initially were your responsibilities? What was the endowment like back then?

• 15:33Speaker 00

  Nine years ago, I joined as a generalist. I worked on a lot of different asset classes. If I were to think about my split, it would probably be 50% hedge funds, long only, 50% private equity and niche strategies. I was particularly interested in that area. The manager selection piece was the biggest emphasis there. There was a lot of focus on making sure that that manager could deliver alpha. We spent a lot of time in manager selection. Two of the things that Columbia was good at was data. We've always had a data team. I learned a lot from the way it was structured. We had a strategic asset allocation in that we knew what it was, but it was managed differently from the traditional endowment.

• 16:18Speaker 00

  We managed it through risk factor allocation, something that is more similar to today's total portfolio approach. That was different because it was not as simple to understand. It took a lot to understand the depths of how do you roll everything up so that you can understand things with the overlay that you had created. Those two things, being a generalist and approaching the portfolio allocation from a different way than it traditionally did was two of the biggest learnings for me.

• 16:48Speaker 02

  I want to tap into some of those in particular. First one you mentioned was just the emphasis on manager selection. With your background, even at the family office, you said only a portion of your time was spent with external funds, where there was a lot of direct investments. You spent time as the CFO of an operating business. When you initially joined, what were some of the skills and new routines and muscles that you needed to build related to manager selection that may be more common and easy for you nine years in?

• 17:19Speaker 00

  I had developed some of that at the family office already because I don't think there is huge difference in the fundamentals of what you're looking at between a business and a manager. You need to look at the positioning and the beta they're in, what are their votes? All these things apply equally to a business as it does to a manager. All managers need to look at their firms as businesses as well. Thinking about the edge positioning, their moats. On the other side, the people that make up the executive team there, whether it's a couple of GPs or a solo GP, that's not that different from looking at a company where you're looking for a CEO and their team. It's their ability to inspire people, to hire talent,

• 18:04Speaker 00

  to execute, to think about what the next strategic goals are. All those things are similar between a business and a manager. From an investment perspective, it wasn't that different. From a network perspective, it was different. Because when you are a direct investor, you are looking with companies all day. You're not necessarily meeting with funds. You don't really know what's going on, especially when you're not the person who is running the fund. You don't probably think about your competitors that much, unless they are across the auction table from you. The emphasis on the network, the LP network, the GP network, was something that I had to build out in those early days. The portfolio construction and allocation piece

• 18:47Speaker 00

  has also been something that is different. When you think about a direct deal, you are thinking about it singularly and also in a context of maybe a 12-field portfolio within your buyout fund. Portfolio construction of funds is different. On top of that, you have an asset allocation decision and risk management decisions that you have to make that appear different. All those things were my biggest learning curves.

• 19:13Speaker 02

  The other piece you mentioned was around the data component, how you were leveraging risk factors and what we might know as TPA these days. Nine years ago, that wasn't common vernacular in an institutional portfolio, at least not all. What was it that Columbia and you were doing back then that was different than a typical endowment approach to investing?

• 19:38Speaker 00

  It was less common back then to manage to an equity beta or a range. It's more of a form of dynamic risk management. That's what TPA is bringing into the system. A lot of people may not have had the ability or the need to go look at what tilts they had and what risk factors they were exposed to, particularly on a public side. It wasn't managed a lot like a hedge fund. That emphasis on knowing all those pieces of data allowed us to move quickly, allowed us to see a lot of things, particularly in a public side. Privates is a different animal. TPA is difficult to do with some private markets and some private asset classes.

• 20:18Speaker 00

  That rock of what we did as a generalist was that every investment opportunity was evaluated in its cleanest forms, which was what's equity beta, what's the liquidity and what's the cost of that and what's its leverage? Not necessarily, do we want an India VC manager or do we want a X type of manager? It was very little bucket filling. It was bottoms up, first principles of what an investment was.

• 20:43Speaker 02

  How did your role and responsibilities evolve over time?

• 20:50Speaker 00

  Today, I spend most of my time on the privates portfolio. We had a CEO transition about midway in my nine year career here. The portfolio construction piece had been less attended to. We had very little venture in the portfolio, especially compared to our peers. We also needed to diversify the bio portfolio a lot. On top of adding things like growth equity, we evolved into a more specialist concept on the senior team. Two of us took over privates, two took over publics. I moved to San Francisco to the Bay Area near Palo Alto. I moved there four years ago.

• 21:31Speaker 02

  Was this for love also?

• 21:33Speaker 00

  Maybe for the love of my children, but also for the love of technology. I was fascinated with this whole area.

• 21:41Speaker 02

  We'll look to dive into two of the things that you mentioned in particular. The first being the CEO CIO transition. Curious what that was like from your vantage point as someone on the team and the organization is going through that transition.

• 21:57Speaker 00

  Uncertainty is always tough for anybody. You don't know who's going to come in next. You don't know what the next 10 years is going to look like. Also, thinking about the possibility that somebody would come in and we would learn a lot from a new framework. What I would tell people, if you spend a lot of time in one place, you know a maelstrup, but that's the only maelstrup that you know. For me, it was a way to potentially learn a new maelstrup that I might really like. Peter is wonderful and I learned so much from him. It was one style of investing. I was one person and one type of team. I thought it'd be really interesting in some ways to learn from a different perspective as well. It is scary. There are some good things in there. Obviously I had known Kim because she had responded my call call years ago.

• 22:44Speaker 02

  Serendipity at its finest there, full circle.

• 22:46Speaker 00

  She's a big supporter of a lot of different LP initiatives. So we had interacted a lot in the intervening years. I had a lot of respect for her. She came in, I always told the story because it tells you how much I don't know. But when we didn't know who the CIO was to a few people, I said, I hope they don't take away this generalist thing because it's something I truly love. It's always been how I approached LP world. And of course, one of the things that did happen was that I became a specialist versus a generalist. It's still valuable when you're younger and you come in with a generalist mindset, you're able to compare across asset classes. You're picking from a bigger universe.

• 23:28Speaker 00

  Some asset classes are not the right time or space. When Kim came in and made us specialists, I was nervous about the whole transition. I have learned so much for being a asset class specialist to some extent. We still keep a lot of generalist heritage. We discuss every fund together. I can bring in a hedge fund or a long only fund. The benefit to being a specialist for me a little bit later in life was that there was this element of portfolio construction that I had not appreciated. Planning, thinking through your tilts about researching different areas that you needed to inject into a portfolio.

• 24:10Speaker 00

  That was something that I had not had a ton of interaction with when I was a generalist. A little bit more in the family office because it was one big portfolio divided into many different portfolios for different trusts and accounts. It wasn't something that I had thought that much about. In the last four years, when I've spent most of my time in privates, that's been an area that I've had a ton of growth in, talking to different people.

• 24:34Speaker 02

  During that process, when you know the team structure is changing to a specialist model, you're nervous about it. What do you do about being nervous? Do you articulate those nerves and potentially those reservations? Or do you follow your marching orders because that's the new direction of the organization?

• 24:57Speaker 00

  One thing that was comforting was that we never lost our general's heritage. Kim was very specific that it was not the intention. It was more that we kept what we had and there was an overlay of something that was going to be additive versus taking something away. That was a great form of communication from her. Speaks a lot to how she thinks and communicates things within the team. Everything that we do is never authoritative from above. She does a really good job of inciting discussion, getting points be across that might be different from what the directive is and then including them and how it's executed. Today, I don't think that I've lost anything.

• 25:42Speaker 00

  I've gained a ton. That was the narrative that the story played out exactly as it did. When you said it was changing from a generalist team to a specialist team, that wasn't how I thought about it. It wasn't how it played out. It's a little bit of false dichotomies up my head.

• 25:59Ted Seides?

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• 27:17Speaker 02

  Today, how do you spend your time?

• 27:21Speaker 00

  If I think about my time pie chart, it changes every week. Probably 25% of my time with existing managers. Another 25% of my time meeting new managers. The last pieces are thinking about the portfolio, trying to figure out which areas of new research there is. We've been doing a lot of co-invest this year. The rest of the time, Kim includes us in a lot of risk management, portfolio decisions. I spend a lot of my time in that as well and team management. That's the last 25% or so.

• 27:53Speaker 02

  Let's dive into each of those a little bit. Within manager selection, let's start there. For new managers, when do you decide to get involved in a new manager diligence process?

• 28:06Speaker 00

  The nice thing about having such a small team, we have 15 people on the investment side, is that we are transparent and communicative. Almost from the beginning, most people know what we're working on individually. As somebody who's in California and as somebody who has spent a lot of time in privates, even when it's pretty early on, someone will reflect to me, hey, I'm talking to this person. Have you met them before? Hopefully you made it into my notes consolidator. Early on, I would have a flag whether we're talking to somebody and if I have a strong opinion there, I would say something. If not, the team can take several meetings before I or somebody else who's on the private side step in.

• 28:50Speaker 00

  We have a standard process, which is similar to what I had a cat in, where we do a one pager for managers that we meet and we socialize it with the team. And that's typically when it's a little bit more than a flicker of interest. That's either a sector or a type of investment that we want to discuss with the team or a manager we think is interesting. We do a one pager there. The team will comment on it. If it's still interesting for that smaller group that we call the deal team and moves on to the five pager, where we get to the key questions for every investment. I belong to the school where I believe that there's probably five things unique to every investment that will make or break the deal or make or break the returns. We try to get to those questions in the five pager.

• 29:36Speaker 00

  We deliberate them in an intensive way during that time. The final thing is investment proposal. By the time it gets to investment proposal, it's usually pretty baked and it answers a lot of the questions that were raised within the first two processes. I usually am quite involved during the five pager process at least. Sometimes not during the one pager though.

• 29:58Speaker 02

  If you can think of a recent example where you made a commitment to a new manager that was not in the portfolio, what were your specific touch points and your specific involvement in that investment?

• 30:13Speaker 00

  I'm usually pretty involved. Good ideas can come from anywhere. Nobody in the team is monopoly on good ideas. I would hope that having a lot of mistakes in the past that I have some judgment. That's where I mostly come in. Let's say somebody else brings a manager in that he or she thinks is super interesting. I would typically meet them probably on the second time. If we have a good conversation, then we proceed with the questions that we want to answer. That's where the person who's working on it with me, we iterate a lot on what those questions are. We start calling people. The word streams are usually pretty standard at this point. I probably get the most involved at the what are the questions that we need to answer?

• 30:58Speaker 00

  When we are doing references, I like to do off list references. We tend to do a lot of that. That's where a network comes in helpful because people are willing to tell you the truth about what you're asking them.

• 31:13Speaker 02

  Off list references are easier said than done. What are some tips and tricks that you have of answering the questions that you need answered?

• 31:23Speaker 00

  Having invested in a really strong network has been helpful. People have concentrated circles of how much they tell people. If you call somebody as a cold call as an off list reference and you don't know them, you don't have any connectivity with them. It's very little chance somebody's going to tell you something interesting. But if you have a warm introduction or somebody that you already know, which 70% of the time that's the case, or somebody that you know who works in the industry and knows the reputation of whoever you're calling about, that's a different off list reference. It tends to be quite valuable.

• 31:59Speaker 00

  We have absolutely said no to funds because of an off list reference that we got that was negative and was corroborated by others.

• 32:09Speaker 02

  Let's look at a counter example. You mentioned the other half of your time in manager selection is with existing managers. Curious when you decide that you might need to exit a manager relationship.

• 32:24Speaker 00

  Breakups are the hardest thing in this industry. I have to do them on days that I know I can be sad.

• 32:34Speaker 00

  It is tough, especially in a private site when you spend a lot of time with somebody and you expect to be with them for 10 years. That's hopefully the minimum of how much time we are with the manager. Some of the mistakes that I've made in the past amongst many is when you stay on the bus for too long, that can be hard. The biggest reasons that we break up with managers, we try to message that way in advance. So it's not a surprise. Nobody wants to hear about a breakup from a post-it note. Usually the biggest reason is the idea that we think that they're in a different strategy. Fund size increases that go way beyond what we feel is appropriate for the strategy. That's a mathematical one.

• 33:19Speaker 00

  That's more of, are you now searching for AUM versus returns? Sometimes we accept that. Sometimes even when managers triple, double their fund sizes, it's not a unequivocal no. We need to analyze and see if we think it's still appropriate for this strategy. The second reason is sometimes we feel that the manager's life cycle is to or the end. You have a lot of turnover. You have carry that's allocated in ways that we don't think reflects the talent that's in your organization. That's more of a narrative. That's a story around how we feel the future is going to be and nothing to do with their returns.

• 33:59Speaker 00

  The last reason, and hopefully the reason that happens the least, is if we feel that the manager, this is a red flag reason, has sent something to us that was not accurate. Honesty and transparency and trusting your manager is such an important piece of this relationship. That is absolutely a reason that we would break up with someone.

• 34:19Speaker 02

  How much of exit decisions are based on some of the portfolio characteristics on your side versus characteristics from the manager, especially today where there's lots of market construct changes happening on both the public and the private side?

• 34:40Speaker 00

  There are portfolio construction decisions that determine how much we allocate to a manager, how many managers we allocate to, and whether we would add to a new manager. Portfolio construction is huge. Sometimes when you overload in too many managers in one sector, that can happen. It usually comes with a much bigger portfolio review. When that happens, it happens during a time that we have decided to make a bigger change to our portfolio. Sometimes we will trim on the margin. If we have too many tech buyout managers, maybe we won't add a bunch more. Maybe marginally we can trim some or we can trim our commitments.

• 35:19Speaker 00

  We try to manage it like that versus on a dime, say no to a relationship that we think very highly of or care a lot about.

• 35:28Speaker 02

  As your role has evolved over nine years, how and when have you delegated certain components of manager relationship for an existing manager or new manager underwriting as you've progressed in your existing role?

• 35:46Speaker 00

  When you move from a generalist model where manager selection is your job and a lot of your job, you are involved in every single thing with that manager, including negotiating legals. All the desk work as a generalist, I was in Excel looking at things. These things are harder to do as a portfolio constructor because there's just not enough hours in the day. When we decided to go more to the deal team format, which is similar to private equity where you have somebody who is driving and then somebody else who's underwriting, we split it with clean lines. It would be more the relationship piece of things and then the underwriting piece of things.

• 36:29Speaker 00

  Somebody else has a big responsibility to underwrite the investment. Those are probably the biggest responsibilities that I left behind when we decided to move to more a specialist model. Not to say that I am not looking at the data because clearly you need to make a decision. There's a lot of questions that need to be answered. We do have stock analysis. The most important things and the things that drive investment decisions are the creativity around how you answer some of these questions.

• 36:57Speaker 02

  It dovetails nicely into the next bucket of your existing responsibilities being that portfolio construction piece. It's hard not to discuss the current market environment as it relates to portfolio construction. The first place to start on that front is liquidity. What is your approach to the liquidity dynamics of private markets where companies are staying private for longer? There's less distributions on the backend. There's less exits on the backend. How have you approached all of those dynamics from a portfolio construction perspective?

• 37:34Speaker 00

  With regard to your point about private companies staying private longer, the attractiveness of private markets is still there. We believe in it. We're growing it. On the liquidity point, it's a little different for us because I mentioned in the beginning, we had very little venture coming into the late twenties. We don't have a huge illiquid portfolio and we have a comfortable amount of unfundeds today. We have room to grow, especially as public markets have outrun private markets. I'm not switching anytime, but it's been a significant run for public markets. The liquidity piece, we are always watching, but at this point we have root place of offense versus defense.

• 38:18Speaker 00

  The last thing, but talking about market environment, there's some insanity out there. One of the ways that we've managed that is into shared diversification. This is the most crucial time to exercise that.

• 38:31Speaker 02

  Why is that?

• 38:33Speaker 00

  Vintage shared diversification has always been an important venture. This year in particular, with so many funds raising, with so many companies raising at valuations that are multiples of what they just raised about six months ago. We don't want to put all your eggs in a 2026 bucket where people feel good about AI. There are going to be fortunes made in this vintage. You want to be part of the 27 vintage as well. Maybe the next Nvidia is not going to be built till 2028. Vintage shared diversification, particularly in this time and moment, is something that we're watching.

• 39:10Speaker 02

  What are some of the other characteristics in addition to vintage year diversification that inform your portfolio construction in today's environment?

• 39:22Speaker 00

  We think about things as tilts. What are the tilts that we're comfortable with? We categorize them into things like geography. Right now, our US portfolio, our US venture portfolio, our US buyout portfolios, portfolio in generals, is tilted. Are we okay with that? We had a lot of discussions about American exceptionalism a few years ago, still do. There's a lot of questions around what bets are you taking? And every single asset class, then on the portfolio, and you roll it up to the portfolio. Geo is one of them, or at least Leach versus late stage is one of them. There is in VC, the question of specialists versus generals as well. A lot of the VC that we came in with in the 2020s was biotech. That's been a small part of our VC portfolio today.

• 40:06Speaker 00

  So we need to go like tech versus biotech. That's an area that you need to also pay attention to.

• 40:12Speaker 02

  What are the risks that you consider when you put together the private portfolio?

• 40:18Speaker 00

  The biggest one particularly for buyout is higher interest rates. It makes the math different. It makes the growth of the companies more important. Being able to expand margins is a lot more important. Do private equity firms that we look at have the ability to generate that value today? That's a big question for us. The existence of higher interest rates is a risk for a lot of firms to think about. The second risk is the concentration of bets that we have in some parts of our portfolio. With regard to VC, we have a lot of companies that a lot of people have invested in. Some of them are spectacular companies and generational companies. Happy to have those in our portfolio. But I also worry a little bit about group think.

• 41:00Speaker 00

  The idea that there's a concentration in a bet that also has underlying risk.

• 41:06Speaker 02

  What do you do about each of those?

• 41:08Speaker 00

  On the piece of higher interest rates, we spend a lot more time re-underwriting on managers today. One, to make sure that they are on the forefront and understand the dynamics of how the world's changing. Your standard value creation bridge, there's the leverage piece of it. There's the operating margins and growth piece of it. There's the multiple expansion piece of it. We like firms that have proven a lot of value in the operating piece of it. That idea of how do you replicate your success, your operating playbook is particularly important today for buyouts. For venture and the concentration of bets, a lot of it's understanding what's in your portfolio.

• 41:52Speaker 00

  The ability to do that on the part of our team is great. There is the judgment call of do you want to add to some of those companies? Or do you feel that you're over leveraged? Venture is inherently one of those asset classes, high risk, high reward. It's equity seeking. Venture is doing what it should do. It's going after great companies. There are other parts of our portfolio where even within the private portfolio and not extending into hedge funds and other types of diversifiers. Our buyout portfolio, we try to be diversified. We're not just doing tech buyouts. We also have a healthy and growing amount of the high asset, low obsolescence type strategies. The Halo strategies, love that name. That was deliberate. So five years ago, we set out to build a portfolio that was doable in a buyout site.

• 42:37Speaker 00

  That does act as a buffer to some of the bets that we feel are concentrated.

• 42:42Speaker 02

  On the buyout front, where have you found pockets of operational edge?

• 42:49Speaker 00

  Specialists can be helpful there. When you have a healthcare specialist firm, when you have a consumer specialist firm that only does certain types of strategies, you get good at executing the same playbook. You've seen a lot of same movie before. You know all the executives in that arena. You know their reputations by gravitating towards that mindset. This value add, when you can speak the same language and you know something well. That's one area that is interesting. The buy and build strategies have been something that people have been talking about for a few years now. People say to the dream buy and build. I always have a lot of follow up questions because it's such a difficult strategy to execute. Integration of anything is hard.

• 43:34Speaker 00

  Being able to successfully strategically put together a company, integrate that and create value out of one plus one equals three is difficult to do. People who do it well can generate exceptional results. We've seen our specialists and generalist firms do a good job there. It requires good resources and a little bit of a unique way of thinking of how to build a business.

• 43:57Speaker 02

  I want to shift to the last bucket of your time allocation being on team. You mentioning that being an increasing responsibility, especially since Kim has been on as CEO and CIO. What are the types of initiatives that you own on the team front?

• 44:22Speaker 00

  There are 15 people in the investment team. As MGS, we all individually have people who report directly to us. We're responsible for their coaching and mentorship. Maybe because I have a bit of my mom's heritage, I do just spend a lot of time getting to know people, trying to understand what makes them tick. That's the most important thing about mentoring a team. People have goals, people's strengths and weaknesses. As somebody who has a few more years on them, it's interesting to be able to help them leverage their strengths and think about what they can do a little bit better. The formal responsibilities are one piece of what any organization can have. The execution of it is more important.

• 45:05Speaker 00

  The mindset of let's give people feedback in a way that is constructive. Let's tell people if they are doing something that is probably not good for us and probably not good for their careers. The social contract, how do you be a good mentor and coach? The team is so small that I just don't think that matters as much as the mindset that has been set up and the cultural mindset of talking a lot to your team members. The first thing I always tell people, a lot of analysts, they come in from investment banking. When I was in investment banking, you didn't talk to the MD.

• 45:43Speaker 00

  They just sat there and made their calls. It's not that kind of organization. You can team speak anytime, your memes, anything that you think about.

• 45:53Speaker 02

  You have this formal construct of review and of having direct reports. And then you also have a more informal construct of having conversations about what is the culture of the organization? What if someone doesn't vibe with either of those? You've identified them as probably not a good fit in the long term. How do you manage that from your seat?

• 46:18Speaker 00

  This is boring for my mom because she tells me this all the time. It's never the wrong person, it's the wrong job. People have different motivations. They've got to different things. Sometimes that's not the job they need or want. That's the biggest realization. You're not trying to put a square peg into a round hole. You put the square in the square. You try to help people figure out if they are not fitting. If something's going on where there's a lack of fit, is it because they want to do something else? Is it because they culturally are different from a team mindset? Which there are plenty of jobs where exceptionally intelligent people, which everybody in our team is, can go do that doesn't require you to be the biggest team member in the world.

• 47:03Speaker 00

  There are people who go on and do different things. They find the job that is the right job for them.

• 47:09Speaker 02

  The other side of this question is, let's say via these constructs, you know, an individual is going to be a high performer. You also know that career progression at a single organization is limited. You have 15 people, there are only a certain number of managing director seats. There's only one CIO seat. How do you manage that individual from your vantage point?

• 47:36Speaker 00

  There is titles and there's learning and responsibilities. The pyramid gets smaller at the top. It's not unique to us. It's not unique to our industry. The question is how do you keep high performers around? How do you leverage them? There's always natural succession in any organization. People leave to do different things. At the senior end, people retire. People decide to move laterally or upwards. There's some natural attrition that way that allows good talent to stay around. There's also the question of what do you do to inspire them during that time? What kind of responsibilities and learning curves can you give them? At a certain point in your career, that's what inspires you.

• 48:20Speaker 00

  If you're a curious person, which I think everybody in our team is, it's not necessarily when do I get the next title? It's when do I get some autonomy around certain things? When do I get the respect to do some independent things? Satisfy my curiosity and a project that could be additive to the endowment? There's always a lot of other things that you can do.

• 48:41Speaker 02

  What have you learned most from Kim as a manager and a leader?

• 48:48Speaker 00

  When Kim joined us, I called up a bunch of people who knew her. The one thing that stuck with me was one person told me, this is going to be the best experience of your professional career. I thought it was a wonderful reference on her. She's phenomenal. She is authentic, high intellectual horsepower IQ and high EQ. What I found inspiring is the neuroplasticity that she has. She came into a structure that was different from the traditional endowment structure. She's managed to keep the pieces that were making it work, that were important to us, while also adding what was important to her. When you have a lot of experience, it's difficult to get yourself out of those ruts.

• 49:33Speaker 00

  Myself included, I have absolute biases that should be thrown out. What's so interesting about her is that she's always looking forward. She's always looking at why things have changed. Sometimes it has and it's the same movie. A lot of things change over time. She's moved along with that. Specifically on the people front, understanding people, leveraging the strengths and weaknesses. She's exceptional at that. Direct, that helps a lot too. When you can assess something, then you can communicate it in a way that is actionable, executable. That is the perfect type of thing you can do.

• 50:07Speaker 02

  How do you think about your own career progression in the seat you're in now?

• 50:12Speaker 00

  I really like the institution that I invest for. When I got the job at Columbia, I remember telling the headhunter, I feel like I won the lottery. I was so happy. This job is so interesting. It pushes my boundaries every single day. I could do this for a long time, having learned a lot from three phenomenal CIOs, Peter Holland, Tim Donahue, and Kim, all with different styles. If at some point I find a place or a seat that allows me to contribute all those learnings, it would be interesting for me. I've never said no to change. This is a phenomenal seat and a great institution.

• 50:50Speaker 02

  What do you still want to learn before potentially assuming that role in the future?

• 50:58Speaker 00

  It feels like there's a new world order. There's the AI disruption. How do you invest through that? My kid calls it the olden days, which refers to anything that happened during my childhood. The olden days of low interest rates, certain things that we've been used to in the last 10, 20 years are not there anymore. The world's moving super fast. That's an interesting dynamic to consider. It's a lot to digest. How do you adapt to change that fast? How do you upgrade your brain to adapt to change? The biggest thing I'm learning right now, it's that. How do you adapt to this changing condition? Manage selection, that's what I've been doing for most of my career, but you can always get better. Portfolio construction, I'm learning new things every day. I'm making mistakes every day. How do you set culture?

• 51:43Speaker 00

  How do you make an organization better than when you were there? Building that and doing that is something I've been observing for a while. I learn every day on that.

• 51:53Speaker 02

  All right, Erlina, this has been a lot of fun. Let's turn to three rapid fire closing questions. What is your favorite hobby or activity outside of work and family?

• 52:06Speaker 00

  I give you the real answer and then I'll give you the answer that I wish I were doing more. I read a lot. I read for 30 minutes to an hour every single day. It is my meditation. Do not disturb me at any point. That's probably the thing that I do the most consistently. I love doing that. I only read fiction typically. Sometimes I'll put a nonfiction book in that I'm only read fiction.

• 52:30Speaker 02

  What did you read last?

• 52:32Speaker 00

  I just finished Colambi Club by Catherine Suckert. I sometimes reread a lot of things. The thing that I reread the most is probably Three Body Problem. I love that book. The final one that I was going to say was my husband and I did a lot of trip scuba diving. We recently started that again because our kids are at a better age. There's something about being in this place that is much greater than yourself.

• 52:55Speaker 02

  What is your biggest investment pet peeve?

• 52:59Speaker 00

  I can't stand it when people are not intellectually honest. I particularly don't like it when I hear anything like that in a team setting, because I think that's where you should be intellectually honest. Don't sell me something because you think I'm going to buy it. A lot of people are too focused on a short term goal. They fail to realize that every time you say something that's a little bit more of an elaboration, it is discoverable, then it makes the trust factor a little harder. People mistake identifying risks for like a conviction and it goes to intellectual honesty. I've told my team a few times, if you don't find awards, that's the thing that I would be upset about. Not that we would accept awards because we need to accept them, but that's biggest pet peeve.

• 53:41Speaker 02

  Last one. What advice would you give a young allocator that you wish you had known earlier?

• 53:49Speaker 00

  Doing something that scares you every day is a good one. In any job, when you're doing the same thing over and over again, you don't take risks in the sense that maybe you don't say something that you think should be said because you think it would be taken the wrong way or asked a question that you think you should be asked because you think it's dumb or reach out to that person that you don't reach out to because you think they're too important. They don't have time for you. There's a little bit of that where within boundaries, don't be crazy about all that. Doing something that scares you every day, what we're doing right now is the thing that scares me.

• 54:23Speaker 00

  Everyone hates public speaking. That's the only way to grow. It's important to challenge yourself to grow every day.

• 54:31Speaker 02

  Erlina, thank you so much for doing this. It was a total blast.

• 54:34Speaker 00

  Thanks for having me.

• 54:36Speaker 02

  Thanks for listening all the way to the end. If you made it this far, how about one ask from me? Tell one friend about the show. It's the best way to keep growing this incredible community. Thanks so much. And until the next one, stay curious and keep compounding knowledge, relationships, and capital a little bit at a time.

• 55:01Speaker 03

  All opinions expressed by TED and podcast guests are solely their own opinions and do not reflect the opinion of capital allocators or their firms. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of capital allocators or podcast guests may maintain positions in securities discussed on this podcast.