Graham Weaver
speaker
351 appearances
1 recordings
1 series
first heard May 2025
last heard May 2025
Graham Weaver’s voice in public audio — every appearance, attributed to the second.
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Appearances
I mean, over that time, CalPERS probably went from a 0% allocation to, I don't know, 20% allocation. That's a lot of money. Multiply that by foundations, endowments, and everybody. And so you had this just massive tailwind. And then the second one, the obvious one is debt was really cheap. And so that's a big part of the private equity model and borrowing was cheap.
And so you had multiple expansion over that entire period of time. I don't care what anyone says. There was multiple expansion. I mean, we were buying the same companies in 1994 at five times that we're paying 13 times for now and excited about to do so. So you had that trend going on over that same period of time and therefore returns were good, generally speaking.
Today, you fast forward, there's 5,500 private equity funds. It's very efficient. Interest rates are going the other way. That's dynamic one. And then dynamic two is there's eight dynamics very early and it's tiny dollars, but individuals are starting to be able to go into private equity through their wealth management, which didn't used to be a thing.
I think the impact of all that is that the people who were putting up median returns and felt like they had this God-given right to raise their next fund and it was going to be bigger, I think that's not going to work out very well in the next decade or so. I think you're going to have to be pretty differentiated or
The really, really massive firms that are able to collect the money from the individuals, which is the new tailwind coming in, I think they're going to be able to amass assets. But I think it's hard. It's gotten harder every single year I've been in it for 31 years. I think it's going to get even harder just given some of the potential headwinds of interest rates.
One of the themes here has been between your class and Alpine and the talent program, all these things requires that you see the best in people. What have you found are the keys to doing that specific thing well?
I think one of my probably favorite things is when I went back, when I was telling you earlier about Irv Grosbeck and how at certain times in my life, I would walk in and ask for his advice. And he would tell me, hey, I've seen a lot of students, I've seen a lot of people, you got this. Coming from him, I would believe it. It would matter that he said that.
I think a big part of it, Patrick, is we get to be that force now. for these MBAs who are coming in and saying, hey, look, here's been your track record. We've done this a lot. You're going to be awesome at this. You're ready. We're going to help you go do that. And then it becomes somewhat self-fulfilling.
The students believe it and they start behaving as though it's true and that kind of becomes true. So I think seeing the best in people is, it's really one of my favorite things about Alpine. Our passion statement at Alpine is unleashing heroes.
And so we think that the people we're bringing on at Alpine and our companies really are heroes and they haven't had the arena yet to really like fully be the hero that they can be.
If you think about the industry as a big participant in it, are there any parts of it that really bother you? Are there features of the private equity investing style, landscape industry, whatever that you think are messed up?
Yeah, there's a lot of it. I think that, gosh, there's so much money in the business that it's just very, very hard to not get distracted by that. So if you really think about, I was talking about before about the objective statement and how much that matters.
I think if you watch what firms do, maybe not what they say, but what they actually do, their objective statement is go raise the next fund, go raise a bigger fund. I think that that makes sense. That's how they stay in business. But I think it can lead to the wrong behaviors. Specifically, you cut your flowers and water your weeds.
You show these great realized returns and you're compounding your stuff that's not great. It leads to a lot of people that come in the industry and maybe are in it to make money as opposed to build things or don't always show up the best way sometimes.
Anything we haven't talked about that you feel like is an essential part of your story, Alpine's story, ingredients of success as this style of investor that we haven't?
I mean, I think probably the biggest thing is it just took a long time. Through the first 14 years at Alpine, I had seven years of private equity before that. So I'm 21 years into the industry now. I think we managed $400 million or something like that. And we had a huge team and weren't really paying ourselves. 21 years in. 21 years in. I mean, 21 years in, my salary was $100,000. That's a fact.
And we hadn't yet had a carry check because our European waterfall. And so waiting for the last company, which was our best one, it just took a long time. I think Alpine is a success story. A lot of it is because we just stayed with it for a long period of time and we're constantly growing and learning through that entire time.
I think that's something that at least my students and I think a lot of people miss is they probably hear people on your show who sound really successful because they are, but they may not really understand that it doesn't just happen. It takes a long time. And I think giving people the perspective going into starting a company that it's going to take a long time and be ready for that ride.
So pick something you're excited about that you want to stay with for a long time, because if you're in it to make money and exit, you're probably going to be disappointed.
Doesn't that pair beautifully with your questions for your class though? The lifetime questions or whatever that for you to go 21 years and be making a hundred grand, obviously you love part of it. Like you wouldn't have kept going otherwise. It seems like there's quite a nice pairing there.
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