David Weisburd

Family offices have been doing this for decades.

I spoke to Sam Zell's partner, Mark Soter, who continues to run his foundation's family office.

Also, Brent Bishore, he's in the Midwest.

He has this 30-year fund where they figured out that, A, first of all, if you make a fund that lasts longer, you're making decisions over a longer time horizon, you actually build healthier businesses.

Mm-hmm.

If I asked you guys to flip something in three years versus holding it for 10 years, regardless of how good of a guys you are, your incentive is just going to be to build a fundamentally different business.

What's corrupted that process historically is these two to three-year fund cycles.

You always want to be showing momentum.

So everybody ends up owning slightly worse versions of the business downstream because of these short-term over-optimizations.

Why do founders lower their valuation in order to partner with you?

You guys both embrace this contrarian philosophy that I share transparently, popularized by George Soros, which is invest and investigate.

Put in a little money and learn more to get an insider edge.

Tell me about that philosophy and how do you internalize that philosophy into your fund?

We...

It reminds me of a diligence question I like to ask towards the end of the process, which is, what am I going to find out in the next board meeting that you're not telling me right now?

People don't always, and usually they don't answer that honestly, but that's really what you're trying to suss out, which is, what am I going to find out within the business that I could never really find out?

That's not in the spreadsheets.

That's not in the data room.

As a thought experiment, if you could invest $1 in the business to get access to information and be on the inside, obviously you would do it.

So it's a question of what is the right sizing of the first check in order to make it more valuable than potentially the downside.