🎧🍌 What Investors Get Wrong About Asset Allocation, The Past Present and Future of Venture Capital | Dan Feder, University of Michigan
Uncertainty is the only way to generate economic profit, the importance of relevance, how to raise from institutional LP's, VC's rolling up services business, beating Lance Armstrong in a race
Daniel Feder, CFA is a Senior Managing Director of Investments at the University of Michigan’s ~$18 billion endowment.
Our two hour conversation talks through the past, present, and future of all things venture capital, and investing more broadly.
Dan lays out the case for why most institutional investors should change how they approach asset allocation, why risk and uncertainty are not the same, the importance of relevance and independent thinking, advice for fund managers raising from institutional LP’s, the trend of VC’s rolling up services businesses, and what he learned from beating Lance Armstrong in a race.
Thanks to Chris Douvos and Adam Kurkiewicz for helping brainstorm topics for Dan!
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Timestamps to jump in:
5:50 Beating Lance Armstrong in a race
8:05 “The will to win is nothing without the will to prepare”
10:39 Why investors need to re-think asset allocation
22:31 Difference between risk and uncertainty
29:26 How endowments work
33:12 Endowment portfolio construction
40:47 From law, to industrial buyouts, to venture
49:13 Narrowing scope to increase returns
54:54 Why career planning as an LP is hard
58:24 VC in the 00’s
1:08:18 Venture vs Adventure Capital
1:15:16 VC’s rolling up legacy industries
1:20:17 Importance of relevance
1:26:25 Traits of the top investors
1:28:25 Importance of trust in institutional LP fundraising
1:32:54 Venture is the most competitive ass class
1:35:37 Why venture firms do not persist over time
1:38:27 How venture will change going forward
1:43:37 The Newman Cycle
Referenced:
A Sense of Where You Are by John McPhee
Risk Uncertainty and Profit by Frank Knight
Find Dan on X / Twitter and LinkedIn
👉 Stream on YouTube, Spotify, and Apple
Transcript
Find transcripts of all prior episodes here.
Turner Novak:
Dan, welcome to the show.
Dan Feder:
Great to see you, and it's nice to see you in Ann Arbor because we pretty much never see each other here.
Turner Novak:
But we're neighbors pretty much.
Dan Feder:
But we're neighbors. And I do have to say, and I wore this in tribute to last time we saw each other, you had disclosed that you had not been to maybe the world's best soup shop, and it happens to be here in Ann Arbor. And we went and had a bowl of soup at a place called Ledog, which is also called La Soup, and it's great-
Turner Novak:
It was good.
Dan Feder:
It's just fantastic. People think of Zingerman's when they come to Ann Arbor, they should also think of Ledog.
Turner Novak:
Ledog.
Dan Feder:
And I eat there almost every day, so there's my product placement and I will move on from that.
Turner Novak:
You're probably like a full four, maybe even five figures of ARR for Ledog. You're a pretty big ACV customer for them. They're like, "We got to keep Dan happy and coming back."
Dan Feder:
They should probably raise around-
Turner Novak:
Based on your-
Dan Feder:
... based on just their-
Turner Novak:
... collateralized future cashflow?
Dan Feder:
I think they need to think about ARR as their metric and then raise a really, really big round.
Turner Novak:
Yeah. I mean, what they could do is they could charge you a subscription fee, and then-
Dan Feder:
I guess. And second thought, they are too profitable to actually raise a good size round.
Turner Novak:
Yeah, that's true. Their gross margins are not negative, so they don't-
Dan Feder:
I think they have to up their game.
Turner Novak:
Yeah. Well, speaking of upping their game, so you actually one time ran a marathon with, and you beat Lance Armstrong in a marathon. What's the story there?
Dan Feder:
Well, now you're ruining something for me. Have you ever done those ice breakers where people say, "Tell me two truths and a lie about yourself"?
Turner Novak:
This is it.
Dan Feder:
One of the things that I say that sounds like a lie but is actually true is that I beat Lance Armstrong at a race, and it just happened to have been a running race-
Turner Novak:
You say race, yeah.
Dan Feder:
... not a bicycle race. So that's, I guess, a little bit cheating on that, but-
Turner Novak:
We'll come up with a new one for you.
Dan Feder:
Yeah. A good friend of mine who was a good friend of Lance Armstrong's, we got together before the marathon and he said, "Hey, if you see Lance in New York, say hi from Brad." So I said, "Cool, I'll do that." And as it turned out, we were right up on the start line together. So I said, "Hey, Brad says hi." And he goes, "Oh."
Turner Novak:
Of course, Brad.
Dan Feder:
Gun goes off, and then we ran together over the bridge and chatted a little bit, and it's about a couple miles over the bridge. And I also had the privilege of running with two people who had won New York before who were accompanying Lance along, Herman Silva and Alberto Salazar. So, we got over the bridge and I could see the circus at the end of the bridge, with the Lance cam and the motorcycles and all this stuff.
And I was going a little bit slower than I wanted to, he was going a little bit faster than he wanted to. So I said, "Have a great race," and went on down the road. And I got down the road and I was a little bit annoyed at myself because my son, who's a cross country runner, was home watching TV and I thought, "He could have seen me run in New York," but I got over it. Next day I picked up the New York Times, opened up the sports section, and right on the front page of the sports section was a picture of Lance Armstrong, Herman Silva, Alberto Salazar, and me with the caption, "Lance Armstrong being paced by running legends."
Turner Novak:
You're a running legend.
Dan Feder:
I actually got to show that to my son and I was very, very happy.
Turner Novak:
Is there anything that's relatable between running and investing, in your opinion?
Dan Feder:
There's some really important lessons I think, around what I take from running and what I do in my day job, and then how I think about navigating life in general. But with respect to investing, a big thing for me is that being competitive, or being competitive on the day of a race, is not enough. And that what really matters are the inputs into what happens on race day. So, it's the getting up at 5:00 in the morning and running in the rain, it's doing all these things that go into what happens on race day. And the thing that bumps around in my head, and bumps around in my head not just in the case of running, is a quote from a marathoner named Juma Ikangaa, he's a Tanzanian marathon racer.
And he said something along the lines of, "The will to win is nothing without the will to prepare." And so in investing, the preparation, the work is really what goes into what happens on race day, and investing, it's the work you do around the fundamentals and doing things right. And it's not that the results kind of take care of themselves, but it's too late if you're trying to win on the day basically. And not every investment's going to win, in fact many don't. And so, that's part of the thing is that the inputs are really the thing that give you the best shot at having good outcomes.
Turner Novak:
It kind of reminds me of that you have to be good to get lucky kind of a thing, where there's luck involved in things but if you weren't positioned correctly to capitalize on just things going your way, it's never going to happen.
Dan Feder:
Yeah. I think most of us would think that when things go well that luck was not involved, and when things go poorly bad luck was the only reason.
Turner Novak:
Yeah, 100% of the time that's the case. Yeah. Well, and then in speaking of investing, I know that you have a little bit of a non-traditional path into how you got into this, but as you've been in it for I think about 205-ish years, you can correct me later if that's the wrong number but-
Dan Feder:
No, that's basically right, on almost to the day.
Turner Novak:
Oh, amazing. Wow, that was a good guess. Do you think anything about how we do this should change?
Dan Feder:
A reason why I'm happy that you invited me to do this pod is that, and this may sound kind of arrogant but so be it, I think that the way that people think about doing endowment management going forward needs to be different, not completely different from what we've been doing because the endowment model, and I'll come back to that, still is I believe a really valid framework and an important model. But over the past 25 years in my observation, and endowment management has existed longer than that, the market has changed, the nature of the asset classes around alternative investments have changed in such a way that what goes on underneath the hood I think really has to be a little bit different in important ways going forward. And the endowment model has really served endowments and foundations, and family offices, and pensions, and any group or investment pool that does long-horizontal investing across asset classes, it has really been a very powerful model.
But what I think needs to change, or I don't think, I'm convinced needs to change, is that the reliance on asset allocation as the driver of what the expected returns are, around reducing risk per unit of return. That all is still valid, but what is missing or what's being underappreciated I think, is that investors who are focused on asset allocation are not taking full account of where they are. So, what's the nature of their capital? What's the nature of their institution? What are their advantages and disadvantages as investors, and playing to those advantages and avoiding the disadvantages. I know that sounds fairly abstract and I'm sure we'll get into it.
Turner Novak:
Yeah, yeah. So, what's a lower level of abstraction on that? If I'm Turner or if I'm Dan at the Michigan Endowment, what would be a way I lean into my advantages or avoid my disadvantages?
Dan Feder:
Well, I'll take the case of Turner versus an endowment in a place like the University of Michigan-
Turner Novak:
Yeah, my strategy, what's my advantage here?
Dan Feder:
... so one difference, I'm sure you'll live a long life and I hope a very, very happy one, but it's probably going to be shorter than the remaining life of the University of Michigan. University of Michigan's been around for 200 years, 200 plus years, and will probably be around for at least another couple hundred years. Unless something changes, you or I won't be.
So, our investment horizon is different and the use of our capital and purposes and so forth are different. University of Michigan has a very large and complicated but very large and excellent research innovation medical platform. It also has an alumni base that numbers in the many hundreds of thousands. It is extremely loyal, and we have institutional advantages around those things. So, if we look at how we invest in the endowment, we can look to, well, where are we? And what is it that we can do? With those characteristics, what is it that we shouldn't do because of those characteristics? There's a book that was written by John McPhee called A Sense of Where You Are, and it's a book about Bill Bradley and his playing days as a basketball player at Princeton.
And there's a passage in there, in which a reporter is asking Bill Bradley how it is that he seems to make, with pretty good regularity, crazy shots, no look shots and so forth. And his comeback was, "Well, I have a sense of where I am so it's really not that crazy." And that's how I think about the difference among institutions and people versus institutions and among people is that if you have a sense of where you are, the things that we might do as a large endowment affiliated with a research university might seem crazy and highly risky to someone like you or I who are doing those in our spare time or as an individual.
Turner Novak:
So, it seems like a way that Michigan could lean into it or someone with a similar setup is you probably have a longer time horizon than the average pool of capital, and probably the vast majority of pools of capital. But you also have a very sophisticated, to your point, of doing research and under covering new things. So, if you combine those two things and you just say, "We need to be doing research that is extremely long-dated," that would be an example of maybe where you'd lean into an advantage that you have?
Dan Feder:
Yeah. A specific example would be a case in which one of our partners in the venture portfolio would come to us with an opportunity to make a co-investment in a company that does something around aerospace, defense, medicine, et cetera. And we can look at that opportunity and reach out into the university and see if there's somebody at the university who knows something about that thing, and connect with that person and develop additional information that would perhaps have a high marginal value or high marginal impact. And then, in some cases we can bring that back to the venture manager, and that's useful. But when we do that, what we're doing is we're creating more engagement with our partner, we're creating engagement with the university, and we're developing maybe some information that has high marginal value, and high marginal value in that we can maybe be right a little bit more often than we would be otherwise.
And in investing-
Turner Novak:
That's good.
Dan Feder:
... the secret is you have to be right about enough things and right about the right things often enough to make it work. And so, that can be pretty powerful if we do that well. And then, just as an added benefit, if that connectivity and that engagement can somehow maybe change the course or the outcome of that investment, even better. And so, that's what I mean about having a sense of where we are. If you or I just approached the university and said, "Hey, I'd like to talk to this world-class researcher in cancer treatments" they'd say, "You seem like a nice person, but we're busy and why should we talk to you?" It is a different approach because in most cases, maybe almost all or essentially all, investment offices, for good reason, view themselves, and they are, fiduciaries of endowments.
Turner Novak:
I feel like they're usually very separate as well, like they're trying to have almost a firewall.
Dan Feder:
Exactly. And so, as fiduciaries, the default position is we need to be separate. We need to keep our decision-making pure and keep it away from-
Turner Novak:
Because you don't want any of like, there's being favors lent or there's you maybe make a bad investment decision because there's some kind of a relation with the school. I could see that. And that's historically the way people have thought about that.
Dan Feder:
We have that, and then there's also people in ivory towers may have a different point of view about economic theory and realities versus people in the investment office who are practitioners and see it in real life. But the general view is that the investment offices need to, and they do operate as autonomous or semi-autonomous, or independent entities. And this approach takes the view of, no, actually we're part of the university. And one of our real advantages is reaching into the university, and then having the university push things back out to us, which then makes us better investors, and again, puts us in the position of being right about the right things a few more times than we would've otherwise.
Turner Novak:
Because there might be somebody that's doing research around large language models, and it's 2017 and they're like, "I think based on what I'm seeing this might be a big deal." And let's say you invested in some AI stuff at an appropriate time because of that. And I mean, that's an example of just you have this interesting research edge that other people don't have and probably made a lot of money hopefully if you invested five, six, seven, eight years ago in some of those companies.
Dan Feder:
Exactly. And then, what we can do is go the other direction, which is connect people who know something about the practical realities or how things are being implemented commercially, bring that back to the university and maybe there are some collaborations. So, I think it's a powerful aspect of where endowments situations, and it's underutilized. And even though we compete against other endowments and we want to beat everybody else in terms of returns, that's just the competitive side of our personalities. But at the end of the day I think all endowment offices, certainly myself, are rooting for other endowments, other foundations to be successful. And I would love it if people were successful leveraging the power, the specific power of their universities and foundations to invest more effectively. And I think that's something that is, it's harder in a sense because it's less neat and tidy than following a recipe book that would say, "Put X percent of your portfolio in public equities and Y percent in hedge funds," or real estate, or venture, or private equity. But that lack of tidiness comes with some benefits.
Turner Novak:
I remember I talked to once, this is a long time, they might not even be doing this anymore, but there's an endowment of a U.S. university who they were reallocating their portfolio and doing some changes, and they were really leaning into I think farmland because they had some advantage in agriculture. And I just remember thinking, "That is a weird asset, but that's interesting." That's probably a good idea if you have some kind of edge in the research you're doing in agriculture. I don't remember if they were buying stuff that was maybe ... I have no idea, but it was like that specific example has always stuck in me. It's like, oh, you have an example. If I say the school, you'd probably like, "Oh yeah, that makes sense to me." So yeah, I feel like more people should do that. And that's what a lot of LPs are looking for when they're investing in fund managers, right? They're like, "What's your advantage? How do you have a structural ability to outperform?"
Dan Feder:
Exactly. There's a book that changed the way I think about investing pretty profoundly, and that's going to sound silly because when I explain it, it seems fairly obvious.
Turner Novak:
I can't believe it took a book.
Dan Feder:
It's a great book. The book is called Risk Uncertainty and Profit, written in I think 1921 or so, by an economist named Frank Knight. And the idea, an idea that underpins the thesis of the book, which was his dissertation for his PhD, actually in a place that does farming, I think it was in Iowa if memory serves, but it wasn't about farming. But the idea is that there are things that are known and knowable, and there are things that are unknown and unknowable, and there is a big risk between risk and uncertainty. Uncertainty is the realm in which things are unknown and unknowable. And what you described with respect to farmland is something that falls closer into that realm of uncertainty, because you said, "This sounds weird," and most people or most investors would say, "Okay, that sounds weird." I don't understand what goes on in the farming industry, I don't really know how I get that information. It's not really knowable in a practical sense. But there's an investor that you just described that has some informational advantage or an ability to navigate that realm of uncertainty.
And Knight's proposition is that the realm of uncertainty is the only place in which an investor can reliably make actual economic profit. Everything else is risk-based. So, risk is different than uncertainty, risk-based investments cannot reliably get you durable economic profit. So, a distinction between risk and uncertainty is that in risk-based models or risk-based investing, what you're doing is you're looking at the past, you're looking at return streams, and correlations, and information that is already known or knowable, and you're making some sort of prediction about the future based on that. With uncertainty, since you're talking about things that are not known or knowable, you haven't observed anything in the past-
Turner Novak:
So, you don't know what it's going to do.
Dan Feder:
... you just don't know what the future is. And so, those are two really important areas or regions. There are things that are sort of nearly uncertain, or risks that go into the fuzzy area between the two. But that framework for me was super important. And it's really important because in the asset allocation model or the asset allocation way of investing portfolios, that's a risk-based approach. So, what you're doing is you are looking at how asset classes or types of investments relate to one another, and putting together in an optimized way a combination of assets that work well together so that you are taking on a level of risk defined really as volatility and return objective. And if you put together the right mix of assets, you can get more return for the same level of risk or-
Turner Novak:
Less return for-
Dan Feder:
... returns for the same level of return. But that is a valid and important framework, and that's what I meant at the beginning of our conversation. The approach around classic endowment management is very much still valid. But what I think is not taken into account is this region of uncertainty, and it's really not compatible. Because when you're optimizing that portfolio, you want to insert these investments that don't have risk characteristics. And you say, "Well, how does this fit?" And basically how it fits is you have to have, I think a level of arrogance or lack of humility around the idea that you can invest into these areas that involve uncertainty, where you think you have an edge or your partners have an edge, and do it in a size where if you're wrong you're not going to destroy yourself.
And then as time passes, and this is also an advantage of endowments with long time arises, as time passes things that were uncertain, or in another framework, non-consensus, over time information is disclosed. They become consensus or aspects of those investments become known or knowable, and then they gravitate back into risk-based system. And if you are uniquely situated, again, going back to if we have unique or highly differentiated access to information from a cancer researcher or an aerospace innovator, then we should be able to invest effectively, if we're good at it, into uncertainty and enhance our returns.
Turner Novak:
So, there may be an example of cancer research, or a new material or design implementation on a aerospace product that has never worked before, or there's no research specifically, or there's no consensus around this is the way you do it, but there's people at the university that think it might work, or there's a greater chance the whatever the market thinks will work. And then you enact the investment and you do it based on the fact that they're more certain than the market is certain.
Dan Feder:
Yep. Yes, for sure. And the thing I wanted to put in there is that even more valuable is the information that comes in or that we have access to that will tell us what not to do. Because-
Turner Novak:
Because there's probably a lot on the other side of that, there's probably a lot-
Dan Feder:
There are a lot of things you shouldn't do and you don't know what sort of trouble you're getting yourself into oftentimes. So many of the very best decisions, because we don't make that many investments, so many of the very best decisions are decisions of what are the things you shouldn't do and avoiding those mistakes.
Turner Novak:
One thing I think might be helpful for people, I'm assuming probably half the people listening understand what an endowment is and kind of the point of it and how you construct the portfolio. But I think probably a good half that are probably like, "What are you guys talking about?" So maybe that might be an interesting thing to just hit on really quick is what are endowments? And then how would you go about putting one together, just starting from scratch, day zero?
Dan Feder:
It's an important question because just to make a little confession, I didn't know what endowments were really, or what endowment investing was when I got hired to do endowment management. I was hired based on my experience doing something else around investing. So in, I guess, the popular press or the popular understanding of what an endowment is, you see the headline that says this university or that university has X number of billions of dollars of endowment. And why don't they just use that money to do-
Turner Novak:
And just give it to the kids and whatever we want.
Dan Feder:
Just dip into the endowment to fund things that are important. The reality is that an endowment as described in that way is really not a single endowment, it's an endowment pool. So the endowment pool is comprised of, in the case of Michigan or any other university, maybe tens of thousands, in our case over 13,000 separate endowments. And the endowment manager has a responsibility to invest that pool responsibly and to keep the interests of the endowment itself in mind.
Turner Novak:
So the pool in this case is probably like the Dan Feder Scholarship for Runners or something or different tiny little things, but then also be like the School of Nursing or something or a larger-
Dan Feder:
Exactly.
Turner Novak:
Okay. And they all collect all 13,000 to say, "This is the Michigan endowment, it's worth X amount of dollars." And each individual single unit is like a 0.01 percentage or 1% of the total together.
Dan Feder:
Exactly.
Turner Novak:
Okay.
Dan Feder:
So when you establish the Turner Novak Endowment for the Betterment of Society, what you would do is you'd put in your capital and then every year, the endowment pool would distribute out typically between four and 5% of the balance of that endowment to the recipient of the endowment.
Turner Novak:
This is something that's mandated to maintain a certain status or something, like you have to distribute some cash?
Dan Feder:
So in the case of foundations, there are rules about how much has to be distributed. It's roughly 5% has to be distributed. In the case of a university endowment, there's a spending rule that's set and they're basically all around four to 5% of a balance. And that balance might be smoothed by averaging balances over some period of time.
But each one of those endowments is basically a, well, it is a unit holder in a mutual fund. So the Turner Novak Endowment for the Betterment of Society will have some number of units and it will distribute a pro rata portion of that overall distribution. So it's not one unified pool that can just be used.
Turner Novak:
You can just be like, "Cool," just take the money out.
Dan Feder:
That's a really important piece of how the endowments fit in the overall context of how a university is financed.
Turner Novak:
And then how do you pull them together? So we have this pool of 13,000 different unit holders. There's a pool of capital. Let's just say we're starting from zero. How would you just think about putting one together? Do you just throw it all in, you just buy Apple stock or OpenAI stock and you just call it a day? Or how do you do it?
Dan Feder:
If you could do that at the right time, you'd probably just do that with perfect foresight. The way I think about it is that the objective of the endowment is a pretty ambitious one in terms of the return. So the return objective is basically meet that spending rate.
Turner Novak:
So earn at least 5% a year.
Dan Feder:
Plus or minus, just to keep up with the spending. Preserve spending power, so keep up with inflation. In the case of higher ed, there's something called HEPI which is higher education-
Turner Novak:
It's a little higher. Yeah.
Dan Feder:
... inflation. And it runs higher generally than CPI. So that, you have usually one or two points higher, but that varies. And then if you're really ambitious or hopeful, then maybe you make some return on top of that. So that solves out to basically-
Turner Novak:
At least 7%. Probably a little more, yeah.
Dan Feder:
... like 7, 8% nominal return. And what you want to do just to make it even harder on yourself is to generate that return with some level of volatility being permitted because you can do some smoothing with averaging the balances over time. But what you want to do is to have intergenerational equity among students and researchers and so forth so that if we're coming through a really happy time in the markets,-
Turner Novak:
We participate.
Dan Feder:
... sending a whole bunch of capital to those recipients. But if we're going through a less happy time in the capital markets, you don't also want to start really cutting back funding on those students and researchers and so forth. So you want to do seven or 8% nominal return for a period of forever or effectively for forever.
Turner Novak:
Participate in all the upside and not participate in downside.
Dan Feder:
Yeah. Within reason and not have too much volatility. So that's a pretty tall order. So the way I think about it is just working backward. So if that's your objective, how do you get there? Kind of a reverse engineering sense. And a starting point is, well, let's just start with that return objective. How do you think you can get there? And the only way that I know of and the only way that seems to have been invented so far, other than just making stuff up or running a Ponzi scheme, is... But those do collapse-
Turner Novak:
But they do make money for a while.
Dan Feder:
For somebody. For somebody.
Turner Novak:
If you run a good Ponzi scheme, yeah.
Dan Feder:
But we don't do that and we don't encourage that. The way you do that is with equity and-
Turner Novak:
Do you buy stocks?
Dan Feder:
So your starting point is-
Turner Novak:
You just throw 100% in the stock market.
Dan Feder:
Let's just look at where you can make that sort of return over a long period of time and those are in equities. So what do we think of when we think of equities, we think of the stock indices or the markets that we all know and love. So the S&P, the Dow Jones, et cetera.
Turner Novak:
And I think the S&P's averaged something like eight, nine, 10% over the past 100 years, right? Like per year.
Dan Feder:
Right, but-
Turner Novak:
So it sounds like you just hit your target, right?
Dan Feder:
Right. But not every year and not even every segment of multiple years. So you run into the problem of, well, wait a minute, what about those students or researchers that get overfunded or underfunded in times of volatility?
So this is where asset allocation comes in and the principles of modern portfolio theory, which is if you can start putting together combinations of assets or asset classes in a way that makes sense, mathematically you can reduce that volatility. Some things go up, some things go down, and have a given level of return with less volatility over time. So you start adding on or loosening a constraint around what it is that you're permitted to invest in. So you start adding in equities-
Turner Novak:
You probably want some bonds in there, right?
Dan Feder:
Well, you also want to have cash so that if things are really funky, you can make your distribution-
Turner Novak:
You need at least 5% probably in a cash-like instrument, at the very minimum.
Dan Feder:
Probably. It seems to be a pretty sensible and general way is looked at as sort of five to 10% in cash or something that looks or behaves like cash. So-
Turner Novak:
But then you only have 85 or 90% of your portfolio getting the equity-like returns.
Dan Feder:
So now you've just... Your ability to make the novel returns.
Turner Novak:
You need to earn a little bit more on that.
Dan Feder:
You need some juice.
Turner Novak:
Yeah.
Dan Feder:
But you also need to simultaneously keep your volatility within spec. So you keep adding these asset classes on that could be additive around that. And that's where investment classes like private equity and venture and private real estate and so forth come into play.
Venture is the area that we think and should be the case that has the ability to generate real upside. We have really, really robust returns. In a way that may be less correlated to other parts of the portfolio, and there's some flaws in how that's measured, but let's just stipulate that as a fact that there's potential there. So that's why we invest in these alternative asset classes because we think that they relate well to other equity or equity-like investments. And in some cases, like venture and private equity, they can provide some return enhancement to the portfolio in cases like real estate and natural resources or infrastructure, they can provide solid returns that have less upside but less correlated to some other things and more steady over time.
Turner Novak:
Yeah, because real estate's interesting because you kind of have either the price of the asset probably appreciates over time generally, but you also get some dividends, some cash flow from it. So it's kind of like a stock mix with a bond in a way.
Dan Feder:
True, and like with any-
Turner Novak:
But not always true.
Dan Feder:
Like with anything, there are many ways to go at this and you can go at it in the way you just described or you can go at it in other ways. Just like in venture, you can do things late stage, early stage, sector, geo, et cetera. There's not one homogenous way to invest in venture and private equity. And that's where I think the fun is, is that the potential around venture in particular is great, but the variability of outcomes is really, really wide. And you can really do badly. And most people-
Turner Novak:
Most people on average.
Dan Feder:
They're looking at the data, most people don't do great. Most of the industry doesn't deliver. But when it does, when it does, if you do it well, it can be really additive.
Turner Novak:
So I think that's an interesting... So you mentioned that venture is the one that you personally are the most interested in, that you've done the most work in historically. How'd you first get started in it?
Dan Feder:
Well, doing more in venture is the last thing that I've done. So I started my career as a lawyer, so about as far away from venture as possible in the sense that-
Turner Novak:
Yeah, it sounds like the most rules-based, follow the book, don't take risk.
Dan Feder:
Well, I love the study of law. I just say that, I really do. Studying law and the study of law, I just look back at especially the three years in law school is just I love those three years. It was fantastic. It's a time where I really learned how to think in a different way, and that's really carried with me.
But being a lawyer is a practice in which you are not rewarded for upside and you are punished severely for being wrong. So it is the exact opposite of the way venture really works, which is it's okay to be wrong or to lose every once in a while, but you really do have the potential of being rewarded for being right. So if I were making up a narrative about my career that I was trying to pretend like it was all a grand design, that's what I would do. I would-
Turner Novak:
Yeah, you were trying to learn the opposite way to do better.
Dan Feder:
I started here and I moved over to the other end and it was this nice gradual glide path from downside avoidance to upside reward. But the reality of it is that just by luck and maybe some serendipity that's not completely random, I moved from practicing law to moving over to the investment side where I focused on credit, complex transactions and structured transactions where understanding the language of how businesses operate and how to really evaluate businesses. And if you're working in that realm, you really have to because you're still in the realm of if you're you're wrong, it's not going to be made up by upside because the best you get if you're in credit is you get paid back.
And I just kept gravitating more and more toward the risk end of the spectrum. And I had the opportunity when I was at Cigna's investment division, which is where I started doing investing, to restart a program that had been neglected around private equity. So the program that I restarted was an unfunded sponsor program where we'd go out and get or establish relationships with groups that did not have funds and work with them on doing, for the most part, industrial buyouts of family-owned businesses.
Turner Novak:
On like a case-by-case, deal-by-deal basis?
Dan Feder:
Right.
Turner Novak:
Okay.
Dan Feder:
So we would finance the whole right-hand side of the balance sheet, take equity stakes of 70 or 80% of the company. Our partner would share their piece of the equity with a management team. But basically, it was, if you think of it in the fund context, similar to a fund in that-
Turner Novak:
Like carry, with 20%.
Dan Feder:
... there's 20% versus 80. And it was great. We looked at and worked with companies that were super interesting. I'm sure you'll be... I was fascinated, I still am fascinated, but-
Turner Novak:
Didn't you say one of them was the biggest manufacturer of hotdog toasters or something? Am I remembering this right?
Dan Feder:
Oh, the conveyor toasters for bagels.
Turner Novak:
Okay, conveyor... Yeah. Okay.
Dan Feder:
It really is great company. It was founded by an entrepreneur named Harrison Holman in Saco, Maine, which is-
Turner Novak:
Never heard of it. I know where Maine is, but never heard of Saco, Maine.
Dan Feder:
Saco, Maine is on the coast. And the conveyor toasters, if you go to bagel shop, you'll see them there, Holman. It's owned by Star now, but it's Holman cooking equipment. So I know a lot about that.
I also know a lot about lead screws and nuts. Those are screws that spin and a nut that travels on the screw to position any number of things, from very large scale things like subway doors to very tiny things like things within very small pieces of medical testing equipment. And the technology around the nut that goes around the screw is really important because the nut can wear out. Having the technology to have that nut be self-tightening at a constant level is hard.
So anyway, those are the things that I started to work on and got more and more interested in the equity piece of how these companies worked, what their prospects were. And then as I got into endowment management, I had more and more exposure to venture. And it's just part of that made up narrative of the logical next progression in my own-
Turner Novak:
So then how did you actually transition into doing venture? Because you're just doing credit related... Well, I guess then more PE. So on paper, looking at a resume, I'd probably just throw it out and go to the next guy who, at the time, what was it? He probably was like an early employee at Google or Yahoo or something. How did you convince that work for you?
Dan Feder:
I was just really, really lucky. So I was looking for something else to do. I had been at CalPERS for a short time, that was not a good fit, I guess would be the way to say it. I just left because I wouldn't do some of the things that were being asked of me to do around making recommendations that I didn't believe in. So I left pretty quickly after joining and I really didn't know what I was going to do next.
And I had struck up a friendship with a private equity investor that I really respected named Paul Levy. And he just did a very, very kind thing, which was, we had lunch together in New York one day and he said, "Look, I think you'd like endowment management." And this is in the year 2000. And going back to the beginning of our conversation, I said, "That's great," around what's endowment management? I said, "That's fantastic, what's endowment management?"
And he said, "Look, what I'm going to do is I'm going to introduce you to someone. I am a guest lecturer for his course at Yale. His name is Dave Swensen." As most people know, Dave Swensen is the-
Turner Novak:
He wrote the book. He literally wrote the book.
Dan Feder:
He literally wrote the book and a second edition of the book on what endowment management is and the best way to do it. And he's the author of the Yale Model that really dominates the industry beyond endowments and foundations.
So he connected me with Dave and then Dave eventually connected me with Andy Golden at Princeton. And Andy at that point was looking for someone to lead venture and private equity. Princeton had outsourced all of its non-marketable investment classes and was bringing them back in-house and Andy was looking for someone to lead that.
And like you said, I didn't have experience doing this thing. But we got to know each other and just had a series of conversations. And Andy eventually hired me on the premise that he would rather have somebody who would learn on the job in a good way, but who had experience doing things that were relevant. And that's really stuck with me for a long, long time.
Turner Novak:
Yeah, I know that's kind of one of your philosophies is that usually the best hires have probably not done the job before. Is that true?
Dan Feder:
It is. But it's not because having specific experience is a bad thing or disqualifying. It is I think because the way that people invest and invest in people is to try to narrow the scope of what they're looking at. It's just, it's helpful. You can't constantly look at the whole landscape.
So if you broaden your scope from just looking at people who have X number of years experience doing this specific thing that you're hiring for, you're disqualifying almost everybody else. And out in that almost everybody else, there will likely be somebody who has experience doing something that is relevant and important and who is passionate about doing the thing you're looking for, and will come up with ideas or approaches that are novel and that you would never have thought of. And that's worked well. And it makes it harder because now you're looking at a broader universe of people.
Same thing in investing. Investors will often come up with rules that they make sense on some dimension. So for instance, an LP may say, "We just don't invest in first-time funds."
Turner Novak:
Too hard to underwrite. We don't know what kind of decisions they're going to make. Too risky.
Dan Feder:
There are all sorts of reasons.
Turner Novak:
Yeah, there's a bunch of reasons.
Dan Feder:
There's some valid reasons why you would say no first-time funds or no funds over a certain size or below a certain size or one-
Turner Novak:
Certain sector or something.
Dan Feder:
... geography or another.
Turner Novak:
Yeah.
Dan Feder:
And this goes back to having a sense of where you are. Those kinds of rules can be really productive and very helpful depending on where you are. So if you don't have any advantages around what's out there in the broader universe, but you are able to do a good job by constraining the opportunity set down to something that is sensibly organized, then your odds of success are better than if you don't.
So I'm going to try this out on you. It'll probably break down in probably the second or third sentence of doing it, but this is the risk of trying out something new in front of a microphone.
Turner Novak:
Okay.
Dan Feder:
So there's an old joke where a drunk comes out of a bar and he's looking around under a street light and a policeman comes along and says, "What are you doing?" He says, "I'm looking for my car keys." And the cop says, "Did you lose them under the street light?" He says, "Probably not, but there's a lot of light here."
And the first takeaway from that joke is, oh, that's silly. Of course, you wouldn't look there, you'd look somewhere else. The reality is that if there's some possibility that you dropped your car keys under the street light-
Turner Novak:
You'll find them easier.
Dan Feder:
... well, then you'll find them more easily. If it's more likely that you dropped them outside the light, but you have almost no chance of finding them there, well, it is perfectly sensible to look under the street light.
Turner Novak:
Yeah.
Dan Feder:
Now, this is where I'm going to really try to stretch this, and it may just fall apart. But if you are able to ask a friend and say, "Hey, did you hear my car keys drop?" They go, "Oh, yeah, I did." "Well, where?" "It was back on that dark corner at the corner 4th and Main." Well, then you go there.
Turner Novak:
It's kind of like a light. In the sense of like the-
Dan Feder:
It's kind of like light, but your odds of finding the keys in the dark-
Turner Novak:
Improve significantly.
Dan Feder:
... are way better than looking for them in the light. So it really depends on where you are, what information you have access to. And we do that in investing, in funds, in companies, and people. So it's not just sort of randomly going out into the world and saying, "There's somebody great out here. I hope I find them."
It is, "Well, who are our friends? Who are our reference points? Who's going to tell us, 'Look over here,' this person or this fund or this CEO of a company." These are really special people or these are the people where you ought to spend your time, and don't worry about the rest of it. So if we do that, we're constraining our opportunity set, but in a way that makes more sense for us. But if you don't have those resources, then what you need to do is you need to resource your organization so that you can look at the whole universe and then try to pick sensibly across that universe.
Turner Novak:
So it's kind of constraining yourself to areas where you can create a light to see.
Dan Feder:
Exactly.
Turner Novak:
Yeah. Speaking of that story, is there some element of a drunk person looking for car keys in front of a cop? Is that-
Dan Feder:
Is that what I think of venture capitalists and private equity managers, just these drunkards that wander out of a bar looking for their car keys? No.
Turner Novak:
Okay.
Dan Feder:
But it's the best analogy I could come up with on short notice, so I'm sorry.
Turner Novak:
Sometimes it maybe feels like that, whether we're drunk on hype or drunk on FOMO or drunk on whatever the current thing is.
Dan Feder:
Okay, maybe it does work then.
Turner Novak:
And who's the cop? Is the cop like, "All right, you found your keys, you put them in your car, you started to drive. What are you doing, here?"
Dan Feder:
You're really putting me under pressure here.
Turner Novak:
I mean, think it's a good analogy. So uh, some of the stuff you invested in, what were you thinking there?
Dan Feder:
That's the cop.
Turner Novak:
That's the cop.
Dan Feder:
That's the cop.
Turner Novak:
Well, so then how do you do long-term career planning? If I'm 22 to 30, I'm like, "I think I like this LP thing. This endowment management seems interesting." What's a way to be thinking about your career? And maybe what do people maybe do wrong when they approach that?
Dan Feder:
I think it depends at what stage of your career, where you are. For young people, meaning people coming out of college or even coming out of business school or graduate school or at that stage of their career, and they're not quite sure what they want to do, which should be, in my case, I'm still not, I'm still working on it, but I think I'm getting there. But certainly, when I was in my early 20s, I di-
Turner Novak:
You thought you going to be a lawyer, right?
Dan Feder:
I was convinced, even though I didn't know what-
Turner Novak:
You loved school, you loved law school.
Dan Feder:
Even though I didn't know what being a lawyer was, but it sounded great. At that stage, I think unless you have a really clear point of view about what you're going to do, and this is a little bit of a promotional or advertisement, working at an endowment foundation or a place where that sort of investing goes on is a great place to figure it out. Because if it's the case, we think it is, that we invest with people, whether it's public equity managers, hedge fund managers, venture capitalists, private equity, et cetera, we're investing with some of the best investors in the world. So if you're coming in as an analyst or junior investor into that organization, you get to interact and see in a way that other people just will never be able to observe what it is that it means to do that job. What did these people do? How did they do it?
And we have many, many cases that I can think back on where analysts came into an endowment thinking that, "Oh, public equities is where it's at." And then they find their way to venture capital and they think, "Oh, I never knew that existed and now I've learned something."
Turner Novak:
That was pretty much literally me. I got a job in endowment.
Dan Feder:
That's right.
Turner Novak:
I love investing. This is fun. But man, this venture capital thing actually seems more interesting than anything else that's out there.
Dan Feder:
Yeah. And then there are other cases where people come in and they look around and they say, "You know what? This has been really, really valuable. None of the above." And it also helps, which is really just like investing, it's the investments you don't make that are really, really important, maybe more important than the ones you do.
Going into that kind of setting early on is a decision. So you're deciding to do that versus not a whole bunch of other things. You're not going to go from there necessarily to go be a doctor, a dentist, but you're going into investing and now you're creating still a lot of flexibility at that stage. And another fork in the road could be, well, do you want to invest as an LP or do you want to invest as a GP? And you can get some perspective around that. Now, as you go further and further in your career, it's much harder, on that dimension, to do the switch back and forth.
Turner Novak:
Yeah. What ways has the venture capital asset class kind of changed over the past 25 years? I don't know if there's like a five-year by five year evolution, decade by decade evolution that you've seen. But going back to, I think 2000 is when you got your first job, what have you kind of observed over time?
Dan Feder:
Well, I'll just give you my own experience, and I didn't really appreciate how easy I had it.
Turner Novak:
At the time.
Dan Feder:
In 2000 versus now.
Turner Novak:
What point in 2000, again?
Dan Feder:
There was something going on. I think it was something called the TMT bust.
Turner Novak:
Yeah.
Dan Feder:
But it actually, in hindsight, it made things easier for me. So in that era, the industry itself was much, much smaller than what it is today. The size of some of the fund offerings or offerings across platforms and venture are larger than the whole industry was in 2000.
Turner Novak:
Oh, you're saying the ones today are larger than-
Dan Feder:
Oh, yeah. Yeah. I won't be able to cite chapter and versus what was the size of the whole industry, but it was measured maybe in the single digit billions and funds were not measured in the billions.
Turner Novak:
So what was kind of like average down the fairway venture fund size in 2000?
Dan Feder:
Well, in 2000 there was-
Turner Novak:
It probably stretched a little bit.
Dan Feder:
Well, so the thing of it is that in '99, 2000, funds started raising billion funds, but they came back down to their 200 to 300, was sort of a really sensible center of gravity for an early stage fund. But there weren't that many of them. There weren't that many endowments, foundations, or any other institutions investing in venture or private equity. These were really alternative asset classes across the board, down to hedge funds.
Turner Novak:
The returns were pretty good though, weren't they back then?
Dan Feder:
Returns were great. You could be average and do really, really well.
Turner Novak:
Yeah. So why were there not more LPs putting capital in?
Dan Feder:
Well, they came. They came. And that's what's happened is that the asset class or the investment, I call it asset class, but it really isn't, it's really an investment class.
Turner Novak:
Because there's some asset classes that are truly different?
Dan Feder:
We talk about asset allocation involving asset classes, and the characteristics of an asset class involve things that are important around optimizing across asset classes like homogeneity and so forth. But I'll just call them investment classes. So venture became known. It came out of the sort of less known or unknown into the known and knowable. So more investors came to the industry. Smart people came in to do venture capital, which is good. So the geography of venture expanded, the opportunity set expanded. There's a lot of goodness in capital markets allocating its capital into an area, but it was much, much easier in 2000 in the sense of one, there were fewer participants, fewer LPs, and so it really wasn't that complicated to figure out where you should invest and with whom.
Turner Novak:
Because there's only maybe like 10, 20, 30 relevant funds that you should meet and talk to. You could almost do that in a weekend or in a week, be a tough week, but you could get it done in a quarter or two probably.
Dan Feder:
It wasn't that hard to figure that out. Now getting access was much harder because the funds were actually pretty small. They were fully subscribed and so forth. Did they turn people down a lot? So getting into the very best funds was very, very hard. And that was one of the great advantages that I was at Princeton at the time, at a place like Princeton or Michigan or was UR was before, there's some real advantages of access. Those are long horizon pools of capital, alignment of interest, but also alignment of these are good missions. And then people who have gone to those schools or if there's a possession error, they'll give the possession error to their alma mater for an allocation.
Turner Novak:
Yeah, that's true.
Dan Feder:
But I did do this over a period. I stopped doing it after a while where I would just go around to people with whom we invested and just ask the basic question of how many firms really matter in venture capital. And the answer was always sort of 10 to 12. And in that era of, call it 2000 through 2005, 2006, somewhere in there, the number would kind of bump up a little bit. But basically you could get everybody's top 10 or 12 with 20 names, so pretty tight.
Turner Novak:
And somebody who maybe they're like eight on one person's list, they'd still be 20 on the other person's list. And I was like, oh, there's still good fun, but they're not top time.
Dan Feder:
There's a lot of consensus around that. And it was really based on the idea that there are a certain number of companies that will be funded in a given year or will appear as being important in a given year. And because the industry was pretty consolidated or compact, there were only a handful good two handfuls of funds would those funds who would've access or exposure to those companies. And the name of the game was as an LP, make sure you're in those because you want to have exposure to those companies. So where we are today is there aren't hundreds of firms now. There are thousands of firms.
And because venture is a bigger and more productive area of investment, there are more companies that emerge that are consequential and there's more dispersion of who has exposure to those companies and so forth. So it's a much harder environment. It's not just simply about access. The other thing that was, and I look back and say it was an advantage was it was 2000 and things were falling apart and it was easy for somebody looking back at the time, it didn't seem easy, but looking back, it actually was easy for someone like me coming in not knowing a lot into a situation that was falling knives because everybody who thought they knew a lot was now thinking, well, I didn't actually know that much.
So now you have to go back to like, well, what are the things that are first principles or what are the underlying premises or thoughts about how you do investing well? And then start applying those to what the game on the field. And for me, I came in with a perspective that was more in the fundamentals of how do businesses work and what makes a business successful in a durable way. And I think that was helpful and evaluating fund managers and what it is they were doing, it's helpful in evaluating unrealized track records, which is almost everything when you're looking at a recent fund.
And it's also helpful in how it is that you discern what is an approach that somebody has and how you have a real conversation around that. So looking back on it was actually helpful that I started in a period in which it was a mess in adventure
Turner Novak:
Because it kind of just shocked you into like, hey, you have to learn this and how this actually works because it's not working or it's all breaking and you get a front row seat to that right away.
Dan Feder:
And also you get to see like, oh, this is how things break. The way I got, maybe I've transitioned from being a lawyer to being an investor was that I was doing more and more work restructuring some bankruptcies.
Turner Novak:
For tech companies?
Dan Feder:
No, for really not tech companies, but a lot of private equity backed companies, some project financings that were really, really complicated, some securitized deals, really complicated structures and so forth. But what happens when something goes sideways like that where you're at a stage of restructuring or a bankruptcy, is that the investors basically leave the scene of the accident, lawyers are here, lawyers take over.
And what I found was that in those contexts it was running deals and it finally dawned on me after a little while, wait a minute, I actually like running deals and moved over to the investment side, similarly around a broken situation where funds are starting to look at things within their documents like, oh my gosh, there's a claw-back. Oh, this is rough. We didn't know this was in there. And all these sorts of things. You really get to see how things are pressure tested in the documents, in the behavior of partnerships in the portfolios that were, I guess knowable but really not visible and certainly not visible in the way that investors could internalize those lessons, that's the anti.
Turner Novak:
You don't think about, especially in venture, you don't think about, I'm going to lose money on this. What happens when things go under? You just think about what's the upside that is what they tell you. That's what the podcasts tell you to think about. It's kind of right. It's directionally correct.
Dan Feder:
Is that what you tell people? You're a podcaster.
Turner Novak:
I do feel like that's done though because with venture it's like you can only lose your money, but the upside's unbounded. So you should just maximize as much upside as you can get. That's what they say. I think it's like a famous Bill Gurley quote, right, is like, "Enjoy the upside."
Dan Feder:
You can lose one time's your money, right?
Turner Novak:
Well, I don't think his is the one time's your money. His is like when there's bubbles, just enjoy the upside. Something like that.
Dan Feder:
Okay. Enjoy the ride.
Turner Novak:
Yeah. Well, and I think then it comes back to sound portfolio construction is like you probably shouldn't be constructing your portfolio to need the bubble to give people their money back. You should probably be constructing it as in a worst case scenario, we still feel good about we will make some money, but if there is insane upside, we benefit greatly to the extent of this is why it fits in a portfolio as a venture fund.
Dan Feder:
Okay. I agree, but I disagree.
Turner Novak:
Okay.
Dan Feder:
So I'll push back. This is probably going to come off the wrong way, but I intend it to be nice. I intend to be a nice person anyway or to be at least try to be liked. But I don't think that's the way things work in venture now. I think that the venture capital is now not all that descriptive. It was descriptive in the early two thousands because really all that existed just small early companies. It was really early stage venture capital. There were some exceptions firms that really declared themselves as being later stage and providing financing between later stage and then through to IPO. But today, the term venture capital just covers too much ground. And I think that there's something insidious about that because it allows people to declare themselves or to think of themselves as something they're not.
Turner Novak:
So you can be a venture capitalist, but it's companies that are doing tens of billions in revenue or something.
Dan Feder:
So the outcome is that you have an industry or a set of investors who would like to say that they adopt that. Well, you can only lose one time's your money and really shoot for the upside, enjoy the ride, all those things that there are serious underpinnings to those around what a power law really is and how that works. But there really is a bifurcation in my mind, and so I would like us to find a different labeling.
Turner Novak:
For the different classes of it?
Dan Feder:
Yeah, I think it just really, really needs to be labeling so sort truth in advertising. And it's not a bad thing. I think it would just be constructive. And so the term venture capital came about in, in my looking around, in about 1946, and was really rooted in the term adventure capital, which was started by Ben O. Schmidt was an early partner or is the co-founding partner of J.H. Whitney.
Turner Novak:
Is that related to Bessemer? Was that one of the Bessemer partners names? But it's one of the first, it's the true venture capital firms, right?
Dan Feder:
Yeah. They started out as calling themselves private equity, but the-
Turner Novak:
But then ad venture capital.
Dan Feder:
So the ad venture piece was funding things that involved things that you think of as adventures where you're going out into the wilderness, you don't really know. And going back to the uncertainty discussion, you're going out into uncertainty, this area that involves things that are not known or knowable and things could go well or not. And I think in our own minds we can come around to what does that mean? So it was shortened to venture capital and now it includes all sorts of things. It includes the very, very early stage all the way up to companies that are really well established.
Turner Novak:
I think I saw Databricks did a hundred billion post-money series K, is that venture capital? I'm sure people that invested in that round called themselves venture capitalists.
Dan Feder:
Well, they're venture capitalists because for lack of a better term, that's what they are. But I think at that stage what the funds or the investors are providing is capital for ventures. And so if we just do the bifurcation of there's ad venture capital and there's capital for, there's more of a distinction between what you're doing, but also it's not always the case that a company at inception or very early stage is those aren't the only things. These only circumstances where ad venture capital comes into play. There can be, and there are many examples of companies that have high valuations that are actually pretty substantial, that are doing things that are still on the edge.
Turner Novak:
They're still on the adventure.
Dan Feder:
And capital is going into fund those companies, that's really adventurous. It just happens to be more capital. On the other hand, you can, I think, envision an early stage company that requires funding and it's not really adventurous. So if in order to fund the Turner Novak Scholarship for the betterment of society, you decide you want to open up a plumbing business in Ann Arbor and you're going to need somebody to start the plumbing business. Well, it's fairly clear what the path is to build a good plumbing business. And so the capital is going in. I wouldn't characterize it as adventure capital, that's capital for your venture.
Turner Novak:
I'm probably going to make a spreadsheet and just tell you that I need the money that's in the spreadsheet and we just do it and it probably will work, most likely. I mean, maybe I'm a bad plumber, but.
Dan Feder:
I'm not going to be your first customer.
Turner Novak:
Okay.
Dan Feder:
I'll wait to see how it goes on the reviews.
Turner Novak:
Yeah, the online reviews. Hopefully I got to get my Yelp score high.
Dan Feder:
But I know that you're very good with social media and so forth, and I'm sure that you would figure out a way to manipulate the reviews so that I'm not sure even want to be the 10th customer.
Turner Novak:
I'd probably have some plumbers on my podcast and I'd probably make some tweets about how good of a plumber I am or something.
Dan Feder:
This would be bad. Maybe there's a sitcom here. It's like the VC who decided to be a plumber.
Turner Novak:
That's kind of happening though, right? Where people are like, hey, we're buying these legacy outdated industries and rolling out tech across them. Have you seen that going on?
Dan Feder:
Oh, for sure. I think it's really interesting. It'll be interesting to see how it plays out. There's, I think, a trap in there for that idea.
Turner Novak:
What's the trap?
Dan Feder:
The trap is, let's say in the case of the local plumbers, you have this thesis that you can go out and acquire local plumbing contractors like an existing business. It's profitable. You're going to infuse AI into the system, whether it's customer support or project planning or whatever it is. You're going to infuse technology into it and you're going to expand your operating margin from what has historically been the case of, call it 10 to 12% to 25% because the technology is going to reduce the OPEX to that degree. That's great. In terms of doing the build up, you're acquiring companies that whatever, six times EBITDA and you, you're doubling the EBITDA.
Turner Novak:
You might be growing the company too. So the EBITDA might grow four or five, 10X, you're rolling things up.
Dan Feder:
That would be a productive and sensible strategy. The issue, I think, is that eventually the technology is going to be ubiquitous around all of the plumbing contractors and margins will gravitate back down to where they kind of settle, which is 10 to 12%. So if you're banking on the idea that, well, we're just changing the industry and this industry is no longer a plumbing business, it's a software business, it might have a problem.
I think we saw this movie earlier, so we saw this movie not in roll-ups, but in things like insurance or FinTech where investors thought, well actually this isn't an insurance company anymore. It's a software company and it's deserving of margins that are like a software company and valuations that are like a software company. And you kind of roll the tape forward and you say, you know what?
Turner Novak:
Similar margin profile as the old ones, yeah.
Dan Feder:
It's still an insurance company or it's still a bank. So those are kind of the traps. I think really good investors know how to navigate that. And there are some really exceptional investors doing some really interesting work around roll ups of accounting firms and law firms and so forth.
Turner Novak:
I think you'd probably need to get some sort of structural advantage. You have better access to data that no one else has or something. Or maybe you just get so big, the economy is a scale, you're able to price lower or something like that. I mean those maybe seem like ways that it could work, but you probably thought about this more than I have.
Dan Feder:
I guess the general way I think about it is those are those elements as well. So at what point do you build something which you start with from a small base and now it's a larger enterprise. So the scale of the enterprise has value because of the scale, but there's also an aspect of how you navigate that. And let's say you're doing these roll-ups, you're not using financial leverage, you're just buying the businesses and rolling up. There's still leverage embedded in this, right? You're levered to the technology impact.
And so if you are, I think, sensible about how it is you manage leverage and therefore risk, you can execute well. If you do something, make the mistake of thinking, oh, there's no financial leverage here, therefore we're fine. So no, I can now use a six times acquisition. I can use three times EBITDA. And that's really reasonable leverage. But you're levering to this other thing, which is the impact of technology on expanding your margins. Well now this insidious over leveraging of the businesses, if that makes sense.
Turner Novak:
So then there might be an element of you actually, you're creating your own technology and you do have the best technology or maybe you're then outsourcing your technology to the rest of the industry, turning your cost center into a revenue driver or something like that.
Dan Feder:
This is where your question at the beginning was, well, does that make sense? And the overall idea I think makes a ton of sense. It sounds great. Yeah, stop right there. And it's not that the overall ideas or the macro is easy, it's just less hard than the micro. So a lot of people can be right about the macro and how it is that you go about implementing around that is very, very hard. And that's where the rubber meets the road.
Turner Novak:
One thing I've heard you describe maybe specifically in venture, being a good investor is related to relevance and being relevant. What does that mean to you? And maybe I just made that up, but I'm pretty sure you've said that before.
Dan Feder:
I'm not sure I said it, but I'll trust you. No, you really do have to be relevant. So here's an example, and it's an inconvenient truth, I suppose. So let's go back to 2000 and the TMT bust. And there were some investors going into 2000, some firms that didn't drink the Kool-Aid. And that was the thing people would say, coming out of 2000, it's like, oh, we all drank the Kool-Aid, we overdid it, now we're coming back to basics, etc. And those firms kept raising money because they had that mantra of we all did it together, but now we're coming back to the norms that we always believed were true. And people sitting in LP seats would say, okay, yep, true. You're relevant. We'll back you, et cetera.
Turner Novak:
You were seeing that good deal flow that was also-
Dan Feder:
But then there were firms, investors who said this is crazy, I'm not participating. This makes no sense. The bust happens. On the other side of the bust, those people didn't get funded because they weren't relevant. And that's sort of the dark side of it, but it really matters. And there's a balance in that sense of what it is you're doing and when, because you do have to be, I think whether you're an LP GP founder, you have to be in the game.
You can't just sit in a windowless room with great thoughts, not interacting with the world and being right. You'll just be frustrated and alone and it won't make any difference. You have to be in, and it's really a tricky thing. It's very tricky. How do you maintain relevance? When I look at it from the seat of an LP looking at funds or investor groups, what are they doing to be relevant in winning the deals they want to win, being in the places they want to be in times that are really exciting and maybe overly optimistic and in times that are really rough and where pessimism is the order of the day.
Turner Novak:
Yeah, one thing, I don't know if struggled with is the right word, but I kind of went through throughout 2020, 2021, 2022, was I like multiple LPs that are like, why haven't you pivoted to Web3? You should be a Web3 investor. And it's easy to kind of look back on that in 2025 and be like, yeah, it was a good call back then. But at the time I remember it was kind of hard because that was the thing and that was how you were relevant. And I think maybe one way I maintained relevance through it was I just kind of made fun of how ridiculous it was. And there were actually a lot of people that kind of agreed with that. And one thing that I found a lot of times talking with people, they're like, oh yeah, we know that there's nothing here, but you want to make money. We're making so much money. And I was like, yeah, I do want to make money, but this is not real. It was a tricky thing to balance.
So I don't know. I mean, I feel like as a venture investor, you do have to stay relevant. So that's kind of one thing I've been just trying to think about for a long sustained period of time is how do you navigate those extreme periods of where only maybe certain things are relevant or not, manage those hype and bubble cycles. I don't know what you've seen that's worked well or not.
Dan Feder:
I think what works well, or at least a way that I try to evaluate people with whom we invest is how do they think about these things? Are they thoughtful about them? They self-aware in terms of these are behavioral flaws or characteristics because we're human beings.
Turner Novak:
Yeah, like you want to be popular, you want to be associated.
Dan Feder:
How do you go about investing in times that are sort of crazy and you know they're crazy? How do you go about actually having the conviction to invest in areas that are not well traveled? And I think was a Buffett who said, it's better to be basically wrong with the crowd than right by yourself or something along those lines.
Turner Novak:
I can see that. That's kind of true.
Dan Feder:
It is true. It's very uncomfortable to deviate, but you can't just be completely independent because you need to maintain this relevance in order to do the thing you want to do. I guess if you have the ability or self-awareness to make those decisions intentionally and to understand what it is you're doing, that's a really important piece of it as opposed to, well, all the other cool kids are doing it, so maybe I should too. I want to be cool too.
Turner Novak:
Yeah, and I think there were. The crypto Web3 stuff. The stuff I was working is basically casinos. Casinos are really good businesses. They have high margins.
Dan Feder:
If you're the house. If you're the house.
Turner Novak:
Yeah. It's like I should have been investing in some of the casinos. Coinbase guess is up since then. Maybe actually, maybe Bitcoin is too. Actually, maybe not. I don't even check the price of Bitcoin. I don't know.
Dan Feder:
So you're a healthy person.
Turner Novak:
Well, so what do you think are some other traits of good investors that you've come across? Just venture, maybe other asset classes. What do they usually look like? What are the things that you think typically stand out from your perspective?
Dan Feder:
I think a real common denominator is ... I'm struggling. I'm not struggling. I go back and forth between thinking, well, it's really about people who are contrarian thinkers, but it's really, that's misunderstood I think often because-
Turner Novak:
That's kind of become a non-contrarian word now. Contrarians are so-
Dan Feder:
Yeah, contrarian is non contrarian.
Turner Novak:
Yeah, but the word has been kind of ruined.
Dan Feder:
Well, it's ruined also because people think that contrarian just means doing the opposite of what everyone else is doing. But actually that can't be what it is, because that means that you're just letting everybody else tell you what to do. It's just they're just telling you, "Just do the inverse of it." Then you're not actually-
Turner Novak:
You're just listening to other people to gather opinions.
Dan Feder:
I think it's more along the lines of independent thinking, and really rigorous and careful thinking around what it is and why. Because being a good contrarian I think means that you're willing to do things that other people aren't doing, but when you do them, you do the things that other people aren't doing, you're doing it based on your own thinking. Even if the thinking ends up being the same, you're actually doing the work around why are we doing this and how.
Turner Novak:
It's probably you know the thesis even better than what the current mantra is. You know that there's maybe more upside than what the average down the fairway thinking is. I could see that being a way. That's how I would get comfortable with investing in something that's pretty well known. For me, I'm not just reciting a blog post. I'm writing the next blog post. I know what the next level of this is. I feel like you need to have something like that.
Dan Feder:
Yeah.
Turner Novak:
If I'm starting a fund, have a fund, I'm starting to get within the strike zone of when it might make sense to talk to you or an endowment more broadly, how should I position myself for a fundraise? It sounds like I need to get introduced to you probably within the network. Do I send you a deck? Do we have a Zoom call for 30-minutes and then you wire me some money? What does the general process look like typically that I should approach?
Dan Feder:
I'll take a crack at it from my perspective, but I don't know really the other perspectives all that well. Going back to the idea that investors or people in my seat, have a sense of where they are. People approaching an LP should have a sense of where the LP is. That sounds pretty basic, but really understanding what it is what they're trying to do with their portfolio. What is the composition of their portfolio? How might what you're offering fit? Why is it that the thing you're doing is a good compliment to everything else? And why it is that you think you're the best in the world at doing that thing.
Now, how you get actually into that conversation is also super important. In our case, we only invest with people for whom we're introduced by somebody we know and trust, and so forth. Even then, it's a subset of those people. We don't have a big team, but we do have good networks and we have great relationships we think with our partners. That's where we are and that's how we source opportunities. In order to work with us, that's the starting point.
Turner Novak:
It sounds like trust is pretty important.
Dan Feder:
Trust, it is absolutely important. We rely on people we trust to put us in touch with people they trust. That's really, really important.
I don't know in general what the winning combination is, but I think those would be the things that have to be there. How do you get in front of people? Just like the way a founder would get in front of a VC is you need an intro, you need a way in. There's so much out in the world. How do you get yourself further down the funnel so that you're having a serious conversation as early as possible?
Then again, how is it that the thing you're doing is a good fit for the person to whom you're speaking?
Turner Novak:
Yeah. Because in a sense, you are selling them a product at the end of the day and there needs to be a level of trust. Do they trust the product that you're selling?
Dan Feder:
Exactly.
Turner Novak:
Or the service, or whatever.
Dan Feder:
Exactly.
Turner Novak:
Yeah.
Dan Feder:
Yeah. It's hard. I really don't envy people starting out and raising a fund. It is hard and I just have a lot of respect for people who are doing that.
Turner Novak:
Yeah. That's what I tell people.
Dan Feder:
It's just hard.
Turner Novak:
When people ask me for advice I'm like, "It's way harder than you think to raise a fund. It's 10-times harder than you think."
Dan Feder:
Even if it ends up being easy, it's still that step of going out and saying, "I'm stepping off the curb into the middle of this busy street to try to do something in competition with all sorts of other people and against the odds." I just have a lot of respect for people who have the passion and drive, et cetera, to go do that.
Turner Novak:
It's interesting, talking about the network thing. You've definitely talked about it a little bit, investing from a position of strength. It's not necessarily picking, like you're going out into the dark looking for your keys, picking things out of nowhere. You're figuring out what's your network, where are those lights shining. Then can you rely on your network to make better decisions?
Dan Feder:
Yeah. Then as an investor, this idea of being in a position of strength is, maybe that goes to one of the other things that I think need to be articulated. Even though people in venture are really friendly, and nice, and seem pretty chill, I think venture is the most ruthless investment class there is.
Turner Novak:
Really?
Dan Feder:
It's really hard.
Turner Novak:
Okay.
Dan Feder:
It's super competitive.
Turner Novak:
Which is true, yeah, yeah.
Dan Feder:
I think it is. In contrast to a real estate transaction or a private equity transaction, certainly in contrast to a public equity purchase with stock, each one of those deals can operate independently of the next one. You're bidding for the asset or the business, or what have you, or the investment on a one-off basis. Buying a building over here, it doesn't really impact your ability to win the purchase of the building across town or across the country. In venture-
Turner Novak:
It actually kind of does.
Dan Feder:
Syndicates exist. There are rounds of investors, there are pro-rata rights across rounds. Whether you're winning the hearts and minds of a specific founder or founders will impact whether you're going to have deal flow across town basically. The stakes are super high.
Turner Novak:
Yeah.
Dan Feder:
It becomes really, really competitive. The only way, even though people are friendly and collaborative, at least on one level, the only way you can really win I think in venture is to play for a position of strength. That can be defined in any number of ways. But at the end of the day, you have to be able to win and invest in the investments that you want to be in. You need to be able to defend your position if you're an early stage investor as things go on. Whether that means being able to exercise your pro rata rights or having influence with the founder, and so forth. If you don't have that, I think you'll just get blown to the side of the road.
Turner Novak:
Your returns get eroded away over time.
Dan Feder:
You're just not going to compete well.
Turner Novak:
Yeah.
Dan Feder:
It's a very hard business. It's hard because the outcomes can be fantastic so it should be hard.
Turner Novak:
Yeah.
Dan Feder:
But if you're coming in saying, "I think I'm middle of the road. I don't offend people, I'm just playing on the sidelines," I just don't think that's a recipe for success.
Turner Novak:
Interesting. One other thing I know that, I feel like maybe you've told me this before. Maybe I'm actually making this up, but I'm pretty sure you told me this before. You actually referenced it a little bit earlier in the conversation with the relevancy of firms over time, the persistency of performance. I feel like the general consensus is that returns are pretty consistent over time. The good firms of yesterday will be the good firms of tomorrow. Do you think that was true, is true, or it will be true?
Dan Feder:
I think going back 20, 25 years, 30 years, that that was true because there weren't that many firms and there was a consolidation of power I think of which firms would have access to the companies that-
Turner Novak:
Did it consolidate going into 2000?
Dan Feder:
Well, 2000, the companies that people thought were the companies of consequence turned out to be-
Turner Novak:
Not so.
Dan Feder:
... not so much.
Turner Novak:
Yeah.
Dan Feder:
I think it's a convenient thing for people in my seat to say. Which is, "Well, top core tile firms will be top core tile firms forever."
Turner Novak:
And we're in them-
Dan Feder:
Yes. We can observe the past, this was a top core tile firm so returns are persistent over time for firms. I don't really buy it and I think there's some quantification around that.
The thing that is, in terms of being quantified, that has been true is that firms in the bottom core tile, if they continue to exist, actually stay in the bottom core tile. They don't actually come out.
Turner Novak:
There's movement between the top three, but not the bottom.
Dan Feder:
There's certainly persistence at the bottom.
Turner Novak:
Okay.
Dan Feder:
At the top, I think it's harder for there to be persistence. The experiment that I mentioned earlier on, which is doing the informal survey of how many firms really matter, the thing that shifted around that over time and continues to as well, the firms within that top 10 or top 20 have moved around a little bit. If you think about who the big brands are, the firms that are by consensus, these are the important firms or the high-performing firms, some of those didn't exist until fairly recently. Andreessen Horowitz I think was 2009. That's not that long ago. But they weren't around in that 2000, 2005 era. Thrived as that era first really came along.
Turner Novak:
They're probably a newest entry arrived, yeah.
Dan Feder:
There is movement in that. The persistence really, I think there's some aspects of persistence, but you're not entitled to it and it's not necessarily going to be something that, as an investor, you should just say, "Oh, top core tile once, top core tile forever."
Turner Novak:
Yeah. How do you think that venture as an asset class is going to change over the next five, 10, 15, 20 years? I don't know if you have a good view.
Dan Feder:
I hope it challenges a lot. I've been a little bit frustrated I guess in my own thinking about how persistent. Here's some persistence. That there's one basic model for how firms are structured. It's essentially the PE fund model of some percentage of carry, some percentage of management fee, whether you're a big firm, small firm, big fund, small fund, tech fund, private equity fund. It's not that clever of a model in the sense it should solve every single strategy, structure, et cetera.
What I'm starting to see now is that there's movement around, well, what are the vehicles, what do they look like for how investments are done? I hope and I think it will be the case that over the next five, 10 years and then beyond, the industry will gravitate toward firms that are using the standard contract. I think that will be the realm in which the terms are a little bit more concentrated around the central tendency. Then there will be fewer by number and maybe fewer by dollars.
Firms that have structures in ways of approaching the market, including people who sit in LP seats, about how their investment vehicles are structured. They'll be much more attuned to what the underlying investment opportunity is. That's going to be harder for people who sit in institutional investor seats because that won't really fit into a model that tries to do asset allocation or like-to-like comparisons. But it will be the place I think where the outlier returns are going to tend to be.
Turner Novak:
Interesting. Would this be an example? General catalysts add financing, marketing financing. Have you seen this thing?
Dan Feder:
There's a lot that goes around. You'd see it, whether it's not Twitter, or blog posts, or just in a room with LPs or GPs about, "Oh, so-and-so has deviated."
Turner Novak:
They're doing something.
Dan Feder:
They have a platform or they're doing something over here that's different. Isn't that weird or bad? I think it's really productive.
Turner Novak:
Just that they're trying something new?
Dan Feder:
They're innovating on the model. Some of those innovations either aren't going to work or they're going to require midcourse corrections, but that is the way the markets are supposed to work. There really should be innovation around how capital is raised, how it's invested, and how companies and capital interact with one another. I think that those innovations are fantastic. It doesn't mean they're all good, it just means I think net-net that it's good for the ecosystem or the industry such as it is.
Turner Novak:
Prior guest to the show, his name is Will O'Brien at a company called Ulysses. They do underwater robots. Basically robots for the ocean, autonomous robots for the ocean. He made an interesting point of there's a lot of cases where, as a founder, you might need $100 million, or you might raise $100 million, but you only us 20 million of it. But if you could just raise 20 million and it's a line you could draw. And up to the next 100, is it equity, is it debt? Not sure. But did you really need to raise the 100 million? We didn't need to cram that much into the company.
As an investor whose getting management fees on that money, let's put as much as we can, let's deploy it. But as a founder, I want to figure out what my optimal amount of dilution and just hit that, and not sell more of the company if I don't have to.
Dan Feder:
Yeah, I think that's exactly right. It goes all the way through the system.
Turner Novak:
Yeah.
Dan Feder:
That what you're describing is something that's an inefficiency in the way that capital is allocated, or invested, or deployed.
Turner Novak:
Yeah.
Dan Feder:
There should be someone on the other side of that equation who's a great investor assuming that's a good investment.
Turner Novak:
Yeah. Who knows?
Dan Feder:
Boy, this is what the company needs, this is how you would optimize around the prospects for success with this company.
Turner Novak:
Yeah.
Dan Feder:
Let's do an investment that's structured in this way. But then, you need that investor to have access to capital that allows for that flexibility.
Turner Novak:
Yeah.
Dan Feder:
I think it's exactly right.
Turner Novak:
Yeah. You think over time, we'll get just a little bit different sort of financing mechanisms-
Dan Feder:
100%.
Turner Novak:
... around startups? Yeah.
Dan Feder:
I like disruption, everyone should like disruption.
Turner Novak:
Yeah.
Dan Feder:
In venture land.
Turner Novak:
Yeah.
Dan Feder:
Until they're disrupted against and then maybe they're not so happy with disruption, but I think it's good.
Turner Novak:
You have this framework called the Newman Cycle, which maybe we're a certain point on it today. What's the Newman Cycle?
Dan Feder:
Well, if you're not the master, you're a master of memes.
Turner Novak:
Yeah.
Dan Feder:
I don't have a Twitter game, so I just do things to small audiences. But I put together, this was in 2019 when WeWork had filed their S-1. I thought, "This is not making sense. How do I articulate this to our board?" I just dawned on me there were a lot of Newmans in the world and not all of them behaved the same way. I created a graphic that involved a few Newmans.
Turner Novak:
Yeah, we'll throw it up on the screen for people.
Dan Feder:
Just envision a typical cycle graph. At the beginning of the cycle, you have Paul Newman.
Turner Novak:
Who is he?
Dan Feder:
Paul Newman's a famous actor from mostly the '60s, '70s, and '80s. Really handsome man, very elegant, drove race cars. There's Paul Newman at the beginning, everything is wonderful and looks great and things go along.
I don't know if you're a fan of MAD Magazine, but there's a-
Turner Novak:
I've heard of it, but I'm not a ...
Dan Feder:
Yeah, this is a problem, this generational thing. MAD Magazine has a cartoonish spokesperson named Alfred E. Newman. His tagline is, "What, me worry?" The world could be going crazy and it's, "What, me worry?"
Then from there, we run into Adam Newman as we go up towards the peak.
Turner Novak:
The cycle's starting to crest at the top.
Dan Feder:
Then they arrive at the top, we have John von Neumann, who was part of the Manhattan Project. At the very, very peak is when you get maybe not a nuclear explosion, but an explosion that ruins everything. Then on the downside, we have Newman from Seinfeld. In my mind, I'm thinking, oh, there's Jerry, he comes in and he just says, "Oh, Newman."
The way that that relates to our discussion earlier about leverage and so forth. Applying that cycle to economic thought, then the principles of the use of leverage also aligns with a construct that was put in place by an economist named Hyman Minsky. The way Hyman Minsky describes economic cycles is really based on financial leverage and people think of financial leverage as debt. There are three phases of Minsky's cycle. You have a regime that's hedge financed, and then you go to a regime from there that's speculative financed. Then from there, to a regime that's Ponzi financed.
Those three regimes involve in the hedge financed realm, you have debt where current income can pay principle and interest when due. Then from there, people become more and more comfortable with the risks they took in that realm and they allow for debt that involves income covering interest only, and then you assume some appreciation of assets or appreciation of income over time so that you can pay off the principle.
Turner Novak:
Yeah.
Dan Feder:
Then you go to Ponzi financed where you're saying, "Well, I'm just going to rely on appreciation of asset values because my current income cannot pay principle or interest." Then you do too much of that-
Turner Novak:
You need prices to continue going up in order to just be solvent.
Dan Feder:
You just need up, and up, and up. Ponzi financing is you keep having to ... You're capitalizing your interest expenses. Eventually you have a Minsky moment and everything collapses, and you go back to the hedge financed regime.
The lessons from that I think would be useful, it's useful for me to look back on because in venture, we generally don't think that we're in a regime or a structure that involves financial leverage. The reality is is that higher and higher priced rounds are leverage. You're getting less and less ownership for each dollar invested. You're return is now becoming increasingly reliant on bigger and bigger outcomes.
During the course of a cycle sometimes, and I've heard this a bunch of times, a manager will say, "This is fine. The company's great. The valuation is only a year or maybe two years ahead of itself." That is the exact description of when you're moving towards Ponzi financed regimes because the higher valuations are leverage. You're saying, "Now, I have to look at two years out for the valuation to actually justify today's leverage." Two years out from there, you got to do the same thing over and over again until it's-
Turner Novak:
On a 2X greater scale, or a 4X greater scale, yeah.
Dan Feder:
It just keeps going and then it collapses. You have this Minsky moment.
For me, going back again to the beginning of our conversation around my own journey, most of it by accident and maybe not completely accidental, is that going from a position where you're learning the fundamentals of how businesses work, how financial leverage works, what leverage is was important to me in understanding maybe a little bit better or maybe in a satisfactory way what a good investor looks like and what a good investment looks like, and how risk actually comes into the system. And where are we in the cycle?
Where are we in this cycle? I think we're kind of in Alfred E. Newman space. We're kind of in speculative finance, but we might be bumping up into the Ponzi financed regime, or the Adam Newman regime. My guess is that now we're in the speculative finance regime. If we could just stay there, then you'd say, "Okay, this is nice, we're at this nice little equilibrium," but that's not the way markets work.
Turner Novak:
You never stay there, do you? Yeah.
Dan Feder:
To go back to Minsky, he has a framing which I'll get wrong. But I think in general terms is that investors and capital markets as a result are myopic about the past, and really unstable or not reliable about the future. You end up with a situation where we just inevitable repeat the cycle over and over again. Having a sense of where we are I think is important in evaluating how much to invest, when to invest, how much relevance we want to have at a particular time, and so forth.
Turner Novak:
Interesting. Yeah. I like the framework. I think it's a good way to think about things. Yeah, this has been a lot of fun. Thanks for coming on the podcast.
Dan Feder:
No, this was great. I love it.
Turner Novak:
We got to do it again sometime.
Dan Feder:
Whenever you want. We can always just hang out.
Turner Novak:
Yeah. We can just hang out in Ann Arbor. Yeah.
Dan Feder:
All right.
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