How LPs Allocate to Venture in 2026: What They Want, What They Don’t | Baylor University CIO Transcript, AI Summary & Key Points

The single reason that privates exist is to make money. Period. I'm a little perplexed by the length of some of these funds. It's not clear to me that the GP incentives are aligned with the math that runs endowments. >> Now, I'm a venture investor for a living. And something that's frustrated me for a long time is that we don't get to hear from the greatest CIOS who invest in the venture funds that we run.

Today, I sit down with one of the best in that business, David Moorehead. He's the CIO of Baylor University and he's one of the most respected CIOS in the business. Baylor's endowment is around $2.6 billion. And I'm really proud of this show because it shines a light on a part of the industry that I feel needs a lot more transparency. What we're really after is the velocity of capital, not just returns on capital.

There's a rule in our office that you're not allowed to talk about returns without also talking about time. We happen to have about 2.5% of the endowment in anthropic. I never want to be all in. Things can always get worse. >> Ready to go. David, I am so excited for this. I have done so much talking over the last 24 hours. It's untrue. Um, so thank you so much for joining me today.

This will be a lot of fun. >> Sure. Happy to be here. Now I would love to just start with a little bit of like an overview of Baylor and how you think about investing today from Baylor as an institution >> right it's it's pretty important job right particularly in the uh place that we are with higher ed um right now you know we obviously have fewer high school students in the US um you know kind of coming out of the great financial crisis and so as number of high school students decline That's obviously fewer tuition

dollars. Uh the other thing that we have going on obviously is that the last couple of years it's been more difficult for international students to come over to the states, appropriate visas, stay, etc. All of those things those um are full pay students obviously. And so that kind of compresses higher ed, you know, financial books a different way. And so what that means is that collectively there's a lot a lot of competition uh for domestic students this uh these days.

And if you just look at the last like this incoming class, I guess it would be the class of 2030, there are a lot of schools across the country that did not meet their um their targets for, you know, incoming student class. And what that means of course is that the revenue has to come from somewhere else. And so in this time and space and I think realistically for the next 10 or 15 years, distributions that are coming off of endowment funds are going to be increasingly important.

And so we manage sort of like with that in mind. Now we've always been good at the downside. So historically our office like first quarter of 2026 I think the S&P was down 4% we were flat um you know if you go back over time and you look at the fourth quarter of 2018 the first quarter of 2016 um 2012 if you look at a lot of these different times our office in general tends to outperform to the downside and what we've kind of gone back and looked at is how could we get better at the upside.

Uh we started this about five years ago kind of knowing that this high school, you know, student issue was going to kind of rear its head, be a problem. And so we've reorganized things over the last 5 years to make sure that we're doing we're doing better to the on the right side of the distribution. Is it possible to do both if you >> Well, I've had I've had finance faculty actually laugh at me, right?

So, when I when I say like what we're trying to do and I'll let you be a little bit the judge of that. I mean, effectively what we're doing is we run sort of like a value centric highquality book particularly on the equity side because it's really really hard to control sort of like the equity beta, right? So, uh, you could buy puts. That's kind of like a money losing effort like over long periods of time.

And so, we try to do it thematically through factor um through factor allocations. But that then means of course that to the upside when you're in a momentum driven market, a growthled market that you're going to trail. And so, the issue is, you know, the market's up 70% of the time. If you're going to trail to the upside, that's going to be problematic.

And what we've tried to do over the last really 3 to 5 years is we've tried to increasingly solve that with convexity. And we've tried to do that in a manner such that we're actually not paying a theta bill on on sort of like a normalized basis. >> I have to ask increasingly solve that with convexity before we move to theta. What do you mean by that?

>> Yeah. So basically what we've done is typically higher ed outsources the investment of the endowment to a whole set of different managers. And so we by nature have a bunch of we have a bunch of investments in a number of co-mingled funds. And co-mingle funds by definition means that there's one GP who's managing the money and then there's like a hundred or a thousand LPS who are receiving the returns on that money.

The issue with co-mingled funds is of course at any given point in time you're receiving the average risk return profile that that manager is providing in order to keep all of those LPS satisfied. And at any given point in time, Baylor's uh risk return need might vary from what the average LP in that fund uh would desire. And so what we've tried to do is kind of go directly to the GP and say, "Hey, this comingle thing isn't like totally working for us.

We need to like optimize our risk return profile better. If we give you a bunch of money, would you would you run the same strategy but do it just for us and then we have a look or a call into what's going into the portfolio. So let me give an example. Say we have Nvidia in the in the portfolio, right? And then the next marginal manager wants to add NI Nvidia to his or her portfolio.

Well, we can look at the portfolio like the GP doesn't know that. We can look at our portfolio and be like, look, we've got plenty of Nvidia. We actually say no, we don't need more Nvidia, right? Or conversely, let's say that we're, you know, value, high quality, the next marginal manager wants to add Nvidia and we're like, we actually don't have any of that.

So, we'd take the Nvidia that you're offering, but why don't you make it three times as big because that's what we need to like back into a more appropriate, more optimized risk return profile for our portfolio and it's actually worked like exceedingly well over the last 2 three years. >> Can I ask just taking a step up when you think about portfolio construction today, you have a blank canvas.

How do you at Baylor think about portfolio construction today? What does that blend look like? publics, privates, credit, debt, venture p. >> It's interesting. We actually spend a lot of time talking about this and in fact I think we probably spend more time talking about this than we actually do um manager selection which is kind of unique in the space.

Um presently we're around 45% private, 47% private, 53 55% public. And I think it's really important for if you're starting with a blank sheet and you're going to do privates, you really need to nail down the private side first, right? Because the private side is going to suck your liquidity and sort of like hog tie your ability to allocate between managers or between strategies.

And so you really need to figure out what sort of liquidity environment can I live with on the private side and sort of determine what that allocation is going to be. And then I think you just need to sort of like box it and set it aside and be like this is what's going to be operating here. And you the reason you have to do that is because this can't change, right?

Yeah, I mean you can do secondaries, you can, you know, tweak it at the margin, but it's really, really hard to move a private book around. What would your answer be for what sort of liquidity profile you thought you needed when you were considering this? >> Right. So, our allocation range around privates is 35 to 55, which means that we want 55 to be the case when we have a denominator issue, right?

When equities have gone down and the public side is smaller than it usually is because of this particular difficulty in the market that the private side isn't going to kick up so much that we're going to be forced into selling, right? Like like the number one thing to avoid is fraud and the number two thing to avoid is force selling, right? That's a disaster.

And so um so we kind of target 45%. >> Um you know if if publics race ahead then it puts some downward pressure on that and if we get into you know a financial crisis something like that it would put upward pressure on that. But for example the last bit in 2022 when tech you know kind of slid a bunch or you could go back a couple years prior to the pandemic.

Uh I think that our private side got to like 51 52 but it wasn't so much that it either constrained our ability to allocate and it certainly wasn't enough that we got into a force selling situation. >> Totally get that. That's super helpful. Can I ask when you think about then the 45% say that we have as the ideal drilling one layer blower how do you think about how to split that up between venture PE and every other private that we can do >> right we've we've had a different perspective on this over the last uh five

or six years that really came out of what I was talking about before when we knew that the school was going to have issues as it related to enrollment, right? And it's not just a Baylor thing, but like every school, um, demographics are can kind of be a slowmoving train wreck, right? But the the benefit of the slow movement is that we can sit back and look 5 years out and know what's going to happen.

And so we started this five or six years ago, like shortly after the pandemic, and we basically said the single reason that privates exist is to make money. Period. End of story. And so anything in the private book that isn't going to lend itself to excess returns, again, we need to create money to create more distributions for the school that's going to have enrollment, you know, concerns.

And so if you're not going to keep up with the highest returns that we can generate out of the private book, we're we've kind of moved on from that. And so a lot of the real asset stuff in our book is sort of like winding down, not being renewed. And so we're really focusing to get back to your question today. We're focusing on VC expansion, growth, equity, capital, and buyout.

That's kind of it, right? So if we're going to lock up money, we want the highest returns. >> How do you think about trying then? If you want VC, you want growth equity. How do you think about trying to get into the big names, the sequoas, the benchmarks, the founders funds, the you name those big brands versus trying to find the young upstart, the little boutique provider that could do a 10x.

I will say that, you know, we're coming along a little bit later to the party than some of the IV Leagues or Stanford or what have you as it relates to the sort of like VC brand names that you're talking about. And so it hasn't been for lack of trying. It's just like when you knock on the door, they kind of like don't answer, right? So we've kind of had to go we've kind of had to like try to figure that out uh differently.

What I will say though is that uh the ladies in our office have had exceptional absolutely exceptional returns out of like the expansion growth equity category. So we've actually we've actually had you know some questions of like should we just allocate more dollars to that um to that sector of the market at the margin we have but I would say you know we still do VC it's still in in probably newer upstart names.

>> David do you like VC? >> I do. I'm a little I'm a little perplexed by the length of some of these funds. And uh I've got to be honest, I'm not sure. I'm It's not clear to me that the GP incentives are aligned with the math that runs endowments. And so >> what does that mean? >> Let's just do it for example, right? you know, it's historically they were like 10, 12 year funds.

Now they're like 15, 18 year funds, right? Um, so much to the chagrin of like all LPS, right? But the issue that you run into is that okay, so you get your money back in 15 or 18 years and let's just say it was like phenomenal experience and you're up like 15x. You're like that's fantastic. But the issue is that it happened over 15 to 18 years. And what you know simple math would suggest is that like if you were in a like growth equity fund um that was six years in weighted average life and you were up 3x and then you

redeployed into another growth equity fund that was up 3x in 6 years and then you did it again that over the course of 18 years you'd be up 27x which is better than 15x like a factor of two. So, I understand why people want to hang on to their winners, but the compounding of capital and I'm trying to create the largest pile of money for students. Students can't pay their tuition with returns.

They have to pay with dollars. So, I'm expressly interested in creating the largest pile of money. And the largest pile of money is governed by like simple compounding math. And so what we're really after is the velocity of capital, not just returns on capital. Whenever the velocity of capital is going to start to, you know, asmmptoically approach like wherever it's going to be, then we want to be out and move on to the next thing.

In other words, like it's really really hard to do like 3x in six years, right? >> It's easier. you have winners now. The company's going okay. Um it's actually looks better on your marketing if you're up 6x instead of 3x. So like if if people held on to it for another 5 years and got like a double then they'd be up 6x instead of 3x that suggests that the next fund will be raised etc etc.

But I actually don't care about any of that, right? Like that's a business decision, right? That's that's related to the business. And I'm not optimizing for the best business for the GP. I'm trying to optimize for the biggest pile of money for our students. And so I get that there's a little bit of a disconnect there, but it the math issue does kind of drive me nuts.

>> Can I ask you a blunt question then? And I I love this interview because it's completely not in my interest as a venture investor and as someone who interviews venture investor. No, no, this is why I love it. This I have the best job in the world. But given the requirements on velocity of cash and the value of compounding which I very clearly see, do you not have an question internally of well why do VC at all?

If we can do growth equity or midmarket and get the 3x in 6 years, I get you David. I'm not doing that for you and and neither's the best firms. Yeah, that well and that is a question that gets batted around a lot in our office and so you know there is something to be said about sort of lading returns right so it's okay you know to go you know have have allocate to you know money to some manager and say like those returns are going to show up like six seven 10 years from now these other returns are going to show up 3

to 5 years from now and then like kind of on my side those returns are going to show up 1 to 3 years from now. So we do think about it that way. But I would say that time actually there's a rule in our office that you're not allowed to talk about returns without also talking about time because it's very common on the private side to just say everything like in well you're up 2x 3x 5x whatever.

But that that tells you nothing, right? If you're up 5x over 30 years that's horrible, right? And if you're up 5x in 5 months, that's, you know, that's amazing, right? I guess that's SpaceX. >> Is Venture then just a pure diversification play for you, which is like >> it is for us. Yeah, >> it is. It's a stage, you know, it it could be the case that somebody allocates to something that really takes off and and and goes quite well.

Like for example, we happen to have about 2 and a.5% of the endowment in anthropic. We have no exposure to SpaceX. We've had no exposure to Open AI. But about 2 and 12% of the endowment is in anthropic. >> Well done. >> I mean, that's not us, right? Like that's managers. >> David, for goodness sake, will you please learn from your managers? Okay. Lesson number one of venture capital.

Okay. Even if it was not you, you take credit and say, "Thank you so much. I remember that one." Yes. That's not really how we roll at Baylor, but >> well, you know, you could learn c can I ask you it's a really diff and I'm not saying with anthropic here, but I'm saying with positions that go public, anthropic obviously will be one, but with positions that go public in the past, how do you think about the I'm going to actively manage it as now the holder versus a common one that I hear, which is that's not our job.

we just liquidate the minute that we get it because we don't know about this asset. >> It'll depend on what we think about the name and it'll also depend about the size of the position once it is public, right? So, we've sold, you know, shares before. Um, we've also had shares before. Um, we've also let shares run before. So, it kind of depends to us what we're expecting what the profile of the portfolio looks like um and the position and the risk associated with it.

>> I was talking to Shan before this show who you mentioned we should chat to who's brilliant Shan Barrett uh and he said that you think more like Charlie Mer than anyone he's ever met. That was that I had it written down >> only because we're in the middle of the country I think. and he said that when software was getting killed early in 2026, you went deep on the situation, wanted to understand every bit of research and then piled in.

Can you can you talk to me about that, your process there, what you saw that others didn't and how you thought about that? I'm just fascinated given that. >> Yeah, we do. I I would say like if if we had an edge um I would say that we're pretty good on human behavior. Um and so a lot of these things, you know, I I don't dispute at all like I'm not an engineer.

Um you know, much of the stuff that comes out of Silicon Valley is over my head. Um but I do know how people think and I do know how people make decisions. And so it's it's pretty easy in in this case, you know, like software is dead. It's all going to zero. Somebody's going to vibe code this and you know, whatever. And like I have friends that run, you know, 3 500 person, you know, private family businesses.

And I it's easy enough to pick up the phone, call them. We're like, "Hey, say your son-in-law vibe codes something and you're going to like tear out your CRM." And they're like, "Not in a million years." Right? It's not their job, right? Like I have a good friend who runs like a vertically integrated like poperri business, right? like he knows everything that there is to know about that, but he is not going to tear out key important parts of you know what makes his business run behind the scenes on some unproven thing

that you know I think I think it was uh the CEO of Salesforce like I don't know six or eight months ago said that like the best that AI was going to be is like 93% right which is like phenomenal and that might be like better than like a lot of people, but the issue is software is 100% right. Right. So, so like if you need your books to like match up and whatever, like yeah, that's not going to happen.

So, I actually think as we've kind of like thought about it more, I actually think that in some of these vertical industries that software is actually going to be the delivery mechanism for AI. that in other words for like my friend who's in like a niche business um very very good at what they do I think I think they're the only vertically integrated poperri um maker in the in the world I think that what's going to happen is that the trust that's been built up with the software providers is going to translate into hey

could you add AI bits you know for for me on the back of this software. And of course, like you know, the SAS companies aren't stupid. It's not like they're sitting there and like, hey, we're worth, you know, 20 or $50 billion. We should let this go to zero. >> What's interesting for me is you analyze this situation and then you decide to act on it.

Like this is very rare for an institution to do. >> Like Sean and others have like told me that, but like I that I don't actually understand, right? Because like if it's on sale, right? So software at that point is like on sale to the tune of like 50 60% from like October of 25. And if you're if the thesis is software's going away, software is going away, >> it's down 50 60%.

You call businesses and they say that's not true. You're like, I'll own that. >> I get you. But it's throwing the baby out with the bathwater. The trouble is I'm not sure what's the baby and I'm not sure what's the bath water. And with the greatest respect I live in technology >> and that's why we have managers like Sean, right? So he's the expert. >> So I'm like, I'm going to give you more money, but I want you to go through your list with me and tell me all the things that are least likely to be interdicted by AI and

then like own those. So I'm I'm making a decision based on human behavior and what how I know people make decisions, right? And I'm allocating based on that. But I'm relying on the manager to be expert in their individual field and give me the correct perspective and what's going on on the ground. >> But what's so interesting is most just delegate to managers and go you're the experts.

You delegate to them. Great. And then you go I'm also going to operate where I have decisions myself and I'm going to interject in those markets. >> I kind of think that that's our job, right? I mean like we are like my seat is like an allocator seat. My job is to allocate to go back to the like the Buffett or Charlie example, right? Like they also are allocators, right?

And they're deciding who gets the incremental dollars. Do they send it to Burlington Northern or do they send it to, you know, their energy company, right? And depending on what the outlook is, what the capex requirements are, etc. you know, they get budgets submitted to them and they may or may not allocate more of their cash pile to those companies.

>> Quite a lot of LPs that I speak to say, I get the liquidity challenge of venture and I get the time lags of venture being difficult, but I learn a lot from what happens in my venture portfolios in terms of AI penetration, new technologies, adoption cycles. Is your venture portfolio a learning academy for you or not? >> Not for me. I would say it goes the other way.

It was I actually learn a lot from the public side managers, right? And what I find is that there's a lot of this like you know spun up like oh my gosh like we're going to have autonomous cars in like three years like in 2016, right? Yeah. Right. Right. like all the regulatory stuff that you have to go through so that you don't kill somebody. Yeah, we're 10 years on and what do we have like 5,000 cars on the road?

Like please. Right. So like I get sort of like the mental imagination that you know you can go like oh yeah we could put you know we could put something on the moon and we could mine the moon and whatever. Yeah. Okay. Like get back to me in 30 years. >> Okay. But you're not worried then about the casinoization of public markets which is >> no markets are the big leagues.

>> The private markets >> they're being me like you know >> whatever there's there's millions of people making decisions on on dollars every single day for every single company. You know how things get valued on the private side? Of course you do. Three people get in a room and say, "Hey, I think the value is X." and they're like, I'll fund it at that.

Great. And that resets the whole uh price. >> But I think public markets in many respects are as irrational as private markets are state. And you saw that, dude. You saw that. You saw that with the state. >> They can they can be irrational because they are governed by people. The difference is is that there are tens of millions of people trading on that information.

Whereas on the private side, there's like three. >> And they decided, those tens of millions of people, that Elon Musk is a premium in himself, that SpaceX should be a $1.8 trillion business. >> Yeah. That doesn't mean that they're right. It just means that it incorporates all available information, which does not happen on the private side. And so what you're saying is that the sheer scale of people voting in this buying decision means that it's a more legitimate price than private side.

Just so I understand. >> Correct. Correct. I don't think there's any question about that. I literally have been in these conversations, right? Where like three guys get together and are like, "Hey, I think it should be this, right? On like on what, right?" And we're like, "Well, I'll give you $50 million at that price." Okay, fine. >> On the fact that I tried the product and I liked it, David, why are you asking me such intellectual questions?

>> Exactly. >> Um, do you trust and I don't mean that badly, but like do you trust the >> the prices coming back from your managers? You know, we we all have our books, our portfolios for people listening and and we mark them in different ways and explain. So uh that's one thing that the ladies have done extremely good job of recall again that I'm coming from the public side.

So you know when you run trading books everything has to be priced every day right? So and ostensibly it's so you make better decisions right because if you have things mismarked then psychology works against you right like if you say that this is worth $30 million and it should be worth $10 million and somebody offers you 20 then because you would ostensibly take a loss from 30 to 20 you're liable not to hit that even though it's a premium to the actual value.

And so pricing is just a way to make sure that you are psychologically aligned to the reality of the market. And so one of the things that we really try to do is to make sure that our managers are not pushing valuations, right? We want valuations to be conservative rather than aggressive. and and you can see that in sort of our return data in sort of like the six months 9 months prior to something being taken out.

Uh our I think average gain on that is sort of like 60 to 90% and I think from a market perspective it's more like 30 to 50%. Which would suggest that our marks our managers marks tend to be more conservative than others. So I feel com, you know, like I kind of sit on top of this thing and I kind of have to vouch for, you know, the valuations that we have as it relates to, you know, talking to the regents or administration.

And I feel pretty comfortable that on the private side, our our marks are actually more sane than than the than on average. As venture eats more and more of the world with your open AIS, your anthropics, your SpaceX, your biggest companies in the world all being ventureback companies, do you maybe feel that you need more in venture, more in tech? Does it change how you view the world?

Does the mindset change? >> No, I I feel pretty comfortable with where we stand. Um I would say I think our biggest allocation is in growth equity on the private side and we feel pretty comfortable with our capability and the manager set that we have there. >> Why do you like growth equity? Because the return to timeline profile >> the the return timeline there's also few fewer zeros right and so that kind of goes to the value bit.

Of course if there I mean it's just simple math. If there are fewer zeros, then everything else doesn't have to cover for the things that don't work, right? Which which is what helps get you to like I think that I think that their book is like annualizing it like 30%. Right, on sort of like the growth equity side. So, um that obviously meets our like eight n% bogey.

So, I don't even actually know that I've ever had that question before. How do you think about like Mulligan vintages uh across Venture and P? Mulligan being like not very good vintages. You know, a lot of people are talking about kind of 21 22 for Venture and P being just like very bad vintages. We all we all just kind of went crazy. It was co sorry Mayor Kulpa and you've got now Toma Bravo obviously who had Medallia which is obviously quite a well-known return the keys situation.

>> That just kind of comes with the territory, right? I mean like if if what you're going basically what we do is we say this is the amount that's going to be in privates and then we say we're going to allocate to PE expansion capital and VC and we're going to do it in these sectors and then I let the ladies have at it and they come up with a portfolio and it has the portfolio overall has sort of like an expected return hurdle that they need to clear.

If they're not clearing it, then that's a problem. If they are clearing it, then that works great. >> Can I ask you what are the annual liquidity requirements? So, like obviously as an endowment, you you mentioned some of the you paying for tuition really important. Um, what are the annual requirements in terms of liquidity for you? >> It's on a couple fronts like obviously on the distribution side that's something that we can't get around, right?

And that's about 5%. um on an annual basis. Um and so that you know on a dollar amount that keeps going up which we want it to right like that is the thing that you know pays for scholarships and professorships etc. On the sort of like subjective side so let's call that like the objective side of the liquidity equation. on the subjective side of the liquidity equation is sort of like what capital do you need to have around to allocate to the next thing that's going to go up you know 20 30%.

So, we talk to our newer analysts about this and we we say like, "What do you think the odds are that we find something to, you know, be up 20% sometime in the next four years, like anything anywhere?" And they're like, "Wow, really high." And we're like, "Great. So then cash is worth 5% a year apart from what you're going to earn on cash." So if cash is earning three and a half% plus 5% so opportunity cost, you know, cash is worth eight and a half percent.

So if we find things to do that are north of that then we do them. And if there's a period in the market sort of like 17 18 19 where we're not finding things to do in that in that ballpark then we let cash uh get larger. So we we kind of came into the pandemic with sort of 15 16% in cash because we were looking around and we're like I don't see something to do and so our cash balance is sort of indicative of you know what we're seen to do to make money >> very difficult to keep your head when everyone else is losing

theirs. It's a brilliant Rodyard Kipling poem. Um but it's very difficult to do when momentum and excitement kicks in. takes one discipline. >> Interestingly in this period this so in the 17 181 19 you know kind of cycle we weren't finding other things to do. This time we actually are finding stuff to do and so we've actually kept our uh cash balances pretty low because we keep finding you know 20 30% annualized things to do.

So um it's just and so our cash balances just end up being a function of like you know what the environment is. >> I think one learns a lot from their mistakes if you are reflective when you look at allocation decisions. What's an allocation mistake that comes to mind first and and how do you reflect on it and learn from it? I can't I can't come up with a specific example right off the top of my head, but I will say this is that whenever you're trading, you you for sure are going to lose money and sometimes you're

going to lose a lot of money and sometimes you're going to lose a lot of money for a long period of time. And the takeaway from that basically everyone goes through it. Everyone, you know, walks into the seat and thinks like that it's not going to happen to me. This seems pretty easy. Sort of invariably, you know, you get kicked in the shins and then hit over the head by a 2x4.

And the takeaway from that is I never want to be allin. Things can always get worse, right? So when we're allocating to software in, you know, Feb, March of this year, we're not like drawing a line in the sand and we're like every every available dollar is going into software, right? It's down 50 60%. Like who's to say it's not going to be down 70 80%.

Right? And so we sort we've set it up so that we're methodically and sort of mechanically allocating into difficult markets. And the reason we do that is to try to take the emotion the psychology out of it. >> Can I ask how do you how do you literally do that methodically allocate into marketing? >> Yeah. So I'll give you a perspective on like the overall markets, right?

So, we basically say if the if the market's down 0 to 10%, we don't care, right? We're an infinite live portfolio, you know, 0 to 10% is like normal stuff. The way that I approach it with young analysts, I'm like, if something's on sale for 10%, do you rush out to the store to buy it? And they're like, well, not no, not really. I'm like, what about 20%.

And they're like, I think about it. Maybe 30%, yeah, probably 40% for sure. Right. And so we think about declines in the market in sort of 10% increments and we have uh liquidity set up in such a way that we could allocate sort of like every 10 percentage points down. Uh we don't really worry about you know 0 to 10%. That's that's normal. >> How do you think about catching a falling knife?

Let's make this real. I've done that before. I've looked at your Wix or your Monday.com which were down in impressively large amounts. I love the founders and dude I I I just determined that I couldn't determine baby from bath water and did nothing but dude they had another 10 20 30% to drop. >> And that's why we do it methodically and mechanistically because we we're never like drawing a line in the sand and saying like down 20 oh I'm all in, right?

Where do I like down 20 maybe I'm 20% in. Down 30 I'm another 20% in. Down 40 I'm another 20% in. Right? So we're doing it in that way. The reality is is that we actually never get all the way invested before it rebounds. And so um you could say that you know we leave money on the table. That's true. Um, but the benefit is is that we're never in the situation where we're like, "Oh my gosh, I love this so much and it's down and I just can't have any more of it."

Right? So, that's the that's the scenario that we're trying to avoid. And that just comes what from like perspective, history, and experience of like, you know, having trading scars all over your body from you. You thought that you were right. You thought that you knew where it was going to go. You put a whole bunch of money to work and then it went lower, right?

It's a terrible place to be. >> It is. When you're holding a stock and it's just down and you're not in a good place, how do you determine between the balance of it's going to come back and I was right and I'm going to stick to my beliefs versus it, I just need to sell because the utility value of cash again, even if it's a loss, it can be recycled again.

How do you think about that? Yeah, a lot of that is in the hands of the managers, of course, right? Because we're not we're not like trading individual stocks. But what I do find is we spend a lot of time working with managers sort of making sure that their psychology and their emotions are in the correct place. So, for example, interacting with Shawn, you brought it up, uh, software space, you know, first part of this year, I was probably on the phone with Shawn every day for four weeks, right?

And we're talking through individual names. I'm relaying what I'm hearing in the market. He's relaying what he's hearing in the market. uh we were sending each other like articles or quotes or um you know news stories at all hours of the day etc. Um, and I like constantly ask him, "Okay, you have this name, but if it goes down like another 20%, what are you going to do?"

Right? Or you have this name and you have another name and versus each other. Which one do you feel better about or has better risk adjusted uh opportunity set here? And then I'd push him to be more concentrated. And that's actually what the portfolio ends up doing. And I think kind of to your point, that's what ends up happening in most cases in sort of real life downdrafts is that portfolios end up getting more concentrated.

>> Does that make you nervous? >> No, we own everything under the sun. So does every like so does every ENF portfolio, right? So like we own everything from like sunscreen to helium to like tech to, you know, like I don't know what, right? Like we own all sorts of consumer product goods uh that you would see in the mall. We own all sorts of businessto business, you know, software or tech companies that I've never even heard of before, right?

Like we're we own like real estate development project. We don't like own everything, right? So, like it's always funny to me when people like compare uh an endowment portfolio to the S&P 500 or something like that. You're like, we're like infinitely more diverse than the S&P 500. It's not even close. If we get a little bit more concentrated on at the margin like that's that doesn't remotely change anything for us.

>> What do you see your endowment CIO cohort do that you think is nuts or wild? There's something that we do that not a lot of schools at our size do and that is we almost hire exclusively from undergraduate ranks. Now to be clear the caveat there is schools or endowments our size, right? So we're about 2.7 billion. Um you know 14 months ago we were 2.2 billion.

Um couple years before that we were 1.4. for right so in that sort of like one three to three billion kind of range and I I've sort of figured out why a lot of people don't do it so it was a little bit of an it was a little bit of something that I missed but the bit is is like if you hire undergrads and based on where we are our office is located in Waco um we're about 100 miles from Dallas we're 100 miles from Austin we're right in the middle between the two um It's pretty difficult for us to hire a mid-career

professional and and get them to stay for a long period of time. It'd be really difficult to pull somebody from LA or New York to Waco and and say like, "I need you to be here for 10 years." And so what we've done to try to solve that is hire from undergrad ranks. They clearly have chosen the school by definition. They've chosen the area, etc. They've been around.

We actually screen pretty hard for that uh when we're hiring people. Um the issue is is that when you do that for the next five or six years, you're spending a lot of time pouring into that person and helping them kind of like level up. Um and during that period of time while they're leveling up, it's like all still on your shoulder. So I now I totally I kind of like forgot that part.

Like I totally got the, you know, we'll have, you know, a stable investment team and, you know, these people won't go anywhere or whatever, but I kind of forgot the bit of like, yeah, and for the next five or six years, you're you're going to be wearing like all sorts of hats during that time. >> Do you think your colleagues are nuts then for not hiring internally?

And do you think the musical jazz >> I think that nuts is not the word that I would use. I I would say that they are accepting alternative risks, right? And so the alternative risks are on the the upside to me is that I have a stable uh team, right? So I have worked with Renee for almost 16 years. The next person uh that we hired, Jyn, she's been here 11 years, right?

And and you can like kind of go on down the line that actually occurs is pretty evident across the across the industry. It's like longevity begets returns. So I'm benefited on the stability front. The negative for me is that the upfront, you know, bearing of all of that um you know time I have to I there's a period of time where I have to like carry carry the carry the team.

On the flip side, if you hide hire mid-career professionals, uh you don't have sort of like that upfront cost of like having to carry the team, right? Because they're more plug-andplay. Um but you sort of wear this risk of turnover and you know, potentially poorer returns. >> David, do you think the incentive structure for LPS is broken? And let's be specific on LPs or endowment fund investors.

Yeah, if you look at fund funds, if I crush it for my funds, they obviously have carry and they will do very well from that. With traditional endowment fund investing, you know, if I do really well for you, it doesn't necessarily translate huge paycheck. Are we are we actually do we have a wrong incentive mechanism? >> I don't think it's a wrong incentive mechanism.

I think that it requires people in the space to be very missional, right? So like I wake up every morning uh motivated by sending some, you know, sophomore in high school to Baylor that hasn't even thought about college yet, right? Or some like seventh or eighth grader who doesn't know if they're going to go to college and you know they're thinking about baseball scores from the prior night, right?

like me getting out of bed in the morning, going to work and wanting to crush it is is entirely due to that, right? So, um you know, everyone everyone likes to be able to get their wife something nice or to redo the kitchen in in their house or go on trips, but like that is not the motivating factor for either myself or the people on my team. >> Do you worry about the impact of AI on education?

I worry about the impact of AI on human thinking. Um, so you know there there are a number of studies out I I think that I I don't know about their veracity but like they're coming out of MIT and austere places like that. This suggests that students who are using AI for everything that they do actually show less brain function. Right? This isn't really a surprise.

you see the same thing like if you just sit in a chair all day, right, that your muscle atrophies and so I do have concern about um the effect of AI on actual human logic, thinking um you know that that's sort of like an innately human trait. Animals don't think, right? Humans think. But if you abdicate your responsibility for thinking, it's not clear that humans do that either.

So I have concerns about that. I think education can figure it out and you know use it beneficially. I think um I think it's more of a human discipline problem >> for a lot of my friends CIOS of other endowments sometimes larger. They've been hit with obviously the endowment fund tax which is really hitting larger organizations. How do you think about that?

How do you advise that? >> I would love to be in their position. We are not uh because our endowment per student is too small to be subject to that. But I promise you, if I went to the president of Baylor, I' I've actually had this conversation with Linda. If I go if I go to Linda and say like there's good news and there's bad news. The bad news is that we're going to have to pay an endowment tax.

The good news is that our endowment is three times bigger than when I last talked to you. She'd be like, "Yeah, and so yeah, I don't I would love to have to pay the endowment tax because the endowment was bigger." >> Do you play a game of comparison or is it comparison is the thief of joy? And you know, I think you said earlier, you know, in down times you you obviously are brilliant and in up times you know more challenging.

I think you play a defensive game full year 2025 Baylor return 9.4% >> Dartmouth lowest 10.8. Do you do the comparative side by side or do you row your own race? >> We we do both which I think is the right way to do it. Um I you know every school has a different set of priorities, needs, etc. Baylor's is currently to get the endowment higher on a on a per student basis.

And so for example, what you're referring to in terms of last year uh that was disappointing on a on sort of like a relative basis. But there were two bits that were going on. One was that we had increased the allocation to privates by in sort of like annual commitment amount by about 60 70% in 2020 2021 and following and so returns on from the private side have been dealing with sort of like a second J curve if you will and then the funds of one and then there's like another asset class that we had allocated to those

have been like flat and starting to inlect up and so this fiscal year was the first year that we weren't dealing with the you know JC curve impact on the private side and the first year that we got returns from both you know the fund of one category and this other category and so we feel very very good about sort of like you know our newest analyst was like, "So, basically, you guys tried to change the engine while the car was moving."

And yeah, that's 100% what we were trying to do. We were trying to put a new bigger engine in the car while it was still going down the highway. And we did it. Uh we had like a little bit of a lag last year. um I think we'll be 18 and a half 19% this year uh without any SpaceX or Sarah Bros or anything like that. So um structurally I think the next couple of years look pretty good from sort of a tailwind perspective.

>> Can I ask you we chatted before about a friend of mine who you going to be working with. How do you think about position sizing in the positions that you do decide to engage with? >> Yeah. So, this is an interesting one and you're you're talking specifically on the private side. So, we Yeah. So, we we spent a lot of time on this and be is sort of because of what I had talked about earlier that like we own everything under the sun.

And one of the things that we had figured out is that yeah, you know, we have this relationship with GP and we have this, you know, they're they send us a little note so and so company got sold. It was like a 7x return. And I'm like, okay, great. What does that mean to us? And they're like, well, we'll get back like $400,000. And I'm like, what? Who cares?

Right? Like it it means nothing to the overall endowment. And so one of the things that we've changed in sort of sizing is we start with how much money do we want to have in each underlying company. Right? So in other words, if if the company is going to be up 5x, we want that 5x to matter to the overall fund. So basically what we're doing in sort of like expansion uh buyout uh venture is like a little bit of a different thing because it's like a bigger is a bigger company set.

But basically what we're saying is we want $3 million to be in each underlying company. And so if they have 10 companies on their platform that means we'll allocate $30 million. >> I get you totally. Or another way that I think about it and you can tell me if I'm wrong which very possibly could be the case. I'm a low IQ individual after all. Um is uh it's a $200 million fund and you commit $20 million to it with the theory that if they say we are 10% 10% ownership in every company, great.

If we're 10% of their fund, our exposure is 1% per company. >> Yeah. We don't we don't we think about it in terms of dollars, right? So we say we say how many companies are you going to have? Eight, 10, 12. And then we want two and a half to three million dollars in each company. Like obviously it's up to the manager, you know, etc. We're not dictating that, but we're just doing the math from a from a dollars perspective.

So if you have 10 companies, we want $3 million in each company. So if it was up, you know, 5x, we'd get $15 million back. That matters, right? That's that's enough to matter. Do you want your manager to do what they said they'd do or to play the game on the field? Ventures change more in a year than I've seen in a decade. And actually playing the game on the field, as Bill Gurley says, is the job of a venture investor.

That may be different from what I said to you I'd do. >> Uh we always want managers to say to do what they said that they were going to do. So like my my example is always this. I sort of view my job as like the general manager on a baseball team, right? So, I'm going to hire a third baseman, a shorts stop, a second baseman, first baseman, etc. for various reasons like depending on your fielding percentage, your batting average, etc.

But if I walk out on the field and I have two people on second base, someone's getting fired, right? And it's probably the third baseman who switched to playing second because like I have people set up on the field to play particular roles for particular reasons. So like if you think if you're a third baseman, you think you can play second base better than my second baseman, then you should come talk to me.

But if I ever walk out on the field and I have two second baseman and no third baseman, the third baseman's getting fired like full stop, right? like that. I don't like I don't care what your returns are. So like again, we started off by talking about this. We spend much more time on asset allocation and why things are where they are than we do on individual managers.

>> Okay, this this is so interesting for me. So the markets have changed in the time that I've raised from you. I've moved with those markets and I've done that well and I'm showing you great numbers. I'm making you money. >> Mhm. >> But my position >> if it doesn't fit what we're trying to accomplish, we won't reup. >> Fascinating. And so that's so interesting.

And so you would rather I stayed on second base, do worse financially than move to third base where you've already got someone else. >> I would like you to have a conversation with me before you change your stripes. Yes. >> What would you say in that conversation? I genuinely it's really interesting for me. So I say, "Hey, >> like, why why do you think that you should be able to do this when we have no data to suggest that you're good at this?"

>> The early stage, >> let's let's move out of VC and let's because that's not my space. Let me do something on public equity that's easier. >> Sure. >> There are managers who are like, "We don't know how to time allocations into and out of cash, right? we're just going to be fully invested because we don't know like if the market's going to go up, down, or sideways, right?

Like we're good at picking stocks, right? So, we're going to keep, you know, basically zero cash. That's what we do. And then there are other managers who are like, we actually use cash as an allocation methodology and cash will be from 0 to 15%, depending on what uh we see to do whatever. Both of those track records are subject to comparison to benchmarks, right?

Like we don't change the benchmark depending on like if somebody holds cash or doesn't, right? And so if somebody is like we're fully invested all the time and then I wake up some morning and they have 10% in cash, yeah, they're getting fired because like I don't want to be the guinea pig, right? Like I don't want to be the person that like, hey, you have a new idea now and now you're more of a global macro equity manager and you think that you can time the markets when you have no prior experience or data to suggest

that you can. Yeah. No, you're fired. >> Kind of get that given that example. I think ventures more nuance. It's kind of closer. >> It always is, right? I'm not talking about like lines in the sand around like artificially generated category limitations, right? Like like that's just an artifact that people made up. I'm talking about like hey we're going to do like in we're going to invest in managers or we're going to invest with a manager who is investing companies where product market fit has already been determined.

Right? and then that manager is like, "Yeah, that doesn't work anymore. We're just gonna like invest in, you know, two guys in a garage and we don't know if they'll come up with something or not." Right? Those are two very different approaches, right? So, yeah, the switch between those, yeah, that's a no, right? If you want to go if you want to go from, you know, B to late A, like, who cares, right?

That's the same thing. >> So, we're actually aligned completely actually to It's interesting. I thought we were misaligned. I 100% agree. Um I think your example there, it's kind of like I always say pre and post data, which is like you either you you either have nothing and we're selling Walt Disney, tell me a story. Some people are great at that and you should bet on them for being great at that or you're Jerry Maguire, show me the money, >> which is the post data.

And some people are great at that. And so I totally get that and I think you're absolutely aligned there. Can I ask you a tough one which is in venture it's kind of assumed and it's the unwritten rule that you commit for three funds >> and you should do because that's the duration required to determine quality in a manager. Do you think that's kind of coming from a more macro perspective where you see different asset classes?

>> I don't know. I think we've kind of done that. Um, you know, the issue the issue with, you know, like one fund, even two funds is like you almost don't have enough data to make a decision, right? >> And so, yeah, that kind of makes sense because you don't have data to prove it otherwise. We tend to be very good when there is data to be analyzed and we tend to be less good.

You guys have a vision. I got a dog. Like, give us some money. Like that. That's really hard for us. So, people are good at different things. If I would say you had unlimited money today, unlimited constraints, and you had the Harvard balance sheet, what would you do differently? >> I don't know that I would do anything differently. I think it gets a lot harder for sure at that size and scope.

So like I have, you know, hats off to Narv and like what his team is trying to do. That's like really really hard. And I've actually talked to other CIOS about this, right? Because I want to be prepared for like down the road. At what point do you have to change how you invest? Um that's, you know, very top of mind for us and that's something that a lot of allocators um you know, work on, think through, struggle with.

>> How do you answer that? Is he is >> Yeah, I mean like I've talked to the Notre Dame folks and they're at 20 billion and they're kind of like, you know, we've never we we actually thought that we would run into this at 10 billion, at 15 billion. We actually haven't. But I wonder if there's a place between where Notre Dame is at and where Harvard or UTMCO is at where you actually do have to change how you invest or you can't invest in in the same manner, right?

Because at some point, at some point, and I think that some of the Ivy Leagues are running into this, at some point it kind of doesn't matter how good benchmarks returns are. When you have $40 billion or $60 billion and you can allocate $20 million to a fund, even if you're up like a real lot, doesn't move the needle as much as it used to, right? I mean, when you put that into perspective, if you have a $20 million check in a fund, and I'm sure a benchmark, because we can use that with a multiple here, 20 million

bucks, and you do a 50x, say it's another eBay fund, which would be amazing. I mean, Jesus, amazing, 50x a fund, that would return a billion dollars. And so, to your point of like materiality to a fund, yeah, if you're a 4050 billion endowment, >> it's 2%. You know, like, >> well, are you going to send me a Christmas card thanking me? Like, come on, give me >> Yeah.

I mean, like a billion dollars is great, but like you like you see the point, right? Um, and so yeah, I think I I think that that's a little bit of what like the A16Z kind of thing is like tapping into, right? >> Yeah. The platforms win like just don't do those checks. Just give me 300 million bucks. >> Exactly. Right. And so, yeah, I mean there's those that's what I mean is like at at certain sizes maybe you have to play the game a little bit differently, right?

>> Do you like the large venture platforms or are you like, "Nah, I don't like the poster billion dollar funds. We like small." >> I think it just gets harder, right? I think it gets harder to have a return figure over the requisite period of time that like actually pays you for the risk that you're taking. So, I I think it's just harder, right? I get I get how they I get how they do it.

I get why they do it. Um but I think it is it's the law of large numbers, right? It's just harder. >> I've loved this conversation. It's been very unusual. >> It's true. >> Maybe it's Maybe it's cuz it's where we're in central Texas. I don't know. Still >> no. I normally everyone in my in this is like just like the most like idealistic AI pill venture investor who's just like everything's just like we're not going to have jobs in a year's place >> right I mean like you're already seeing I mean like you are seeing the

push back on AI at the data center level right because where the data centers are being built is in my neck of the woods not in Silicon Valley >> and you don't want Yeah, >> I do because we're invested in it, right? But like you're seeing this you're seeing this sort of nationally, you're seeing it actually internationally is that the most valuable thing for a data center used to be power.

If we go back like five, six years, it used to just be land and then it was powered land and now it's actually permitted powered land. And the reason is because people are like kind of fed up with it and like not in my backyard, right? And so you are getting sort of this push back on >> I'm sorry I don't understand this like why like they're utilizing land that they're bringing jobs.

They're bringing construction. You know what if you don't want >> power prices go up and water prices particularly in herid regions like Texas or Arizona that's a big issue. So yeah, if the if the hyperscalers solve the water thing, that would go a long way towards uh you know the average person being more accepting of it. But then the power thing still exists, right?

And so we know that we know that power dispatch is still, you know, supply constrained and so people's power prices are going to go up until that gets solved over the next five, six, seven years. So, >> David, what do you think happens here? As you said, you're an investor in it, and it's a fascinating perspective you have. What happens here? I'm very naive.

>> What happens with data centers? >> Yeah. Like, do we see a continued uh protestation, push back from Yeah. >> Yeah. I think we do. I mean, we're seeing it in real time in our book. Um, the data centers that have power and that have permits are becoming more valuable. So like like literally we have this situation in our book where our data center sites are up 50% from where they were like 6 months ago.

>> Can I ask what percent of data centers do you think will fail to get up and running despite having been built? And this could be permitting, it could be power, it could be whatever you >> Yeah, I I am not an expert in this in terms of like total total number that have power, total number that have permits, etc. Um, so I'm not going to be able to give you an answer that is going to be, you know, sort of satisfy the question.

But I will say that enough are not happening that the power companies are coming to those who do have permits and saying we can get you power sooner than we thought. >> That's literally happening. >> And just so I understand the bottleneck on those that aren't is permitting. >> It's push back from locals. What's what's the one thing >> it's permitting?

Right. >> Peritting. >> Yeah, it is now. And that that's something that didn't exist six months ago. >> And just so I understand again, I'm dumb as rocks. Why is it so difficult to get permits for these? >> Because the the permitting boards are governed by the citizenry and the citizenry is putting signs up in everybody's front lawn saying we don't want this.

Right? So if those people want to get reelected, then they've got to say no. >> Do you not worry that this doesn't happen in China? It's just a free-for-all. And >> well, I don't think that it does happen in China because they don't particularly care. They just build it where they need it. Right. >> That's my point. And so you're going to see >> like it's a bigger issue.

>> Honestly, it's a huge massive issue in the UK. It's like by far a much bigger issue in the UK than it is in the US on the permitting front. >> What are you talking about? We're not allowed to go outside or move a bin, let alone build a data center. That's my point. That's my point. So, we have a permitted data center site in the UK and it's worth a lot of money simply because we have a permit.

>> Are you bullish on Europe given what you just said there? >> No. No. >> Because of the permitting, because of >> Yeah. because of all of it, because the defense structure of it, because of Russia, because of behind on AI, because because >> would that prevent you allocating towards European managers? >> No, we have allocated to long short managers in Europe precisely because I think there are going to be some pe some companies that win and some companies that lose.

But I will also say that some of our bigger macro hedges are on European indices. David, I could talk to you all day. I'd love to do a quick fire around. So, I say a short statement. You give me your immediate thoughts. Number one, >> this could be like highly dangerous for me. >> Ah, don't worry. We we've got we've gone to Chinese permits, so trust me, the quickfire will be like a piece of cake.

Uh, what have you changed your mind on in the last 12 months? >> Uh, software was one, right? So, software we kind of leaned into pretty hard. We also took energy off at around the same time sort of with the advent of the US Iran war um the straight hormones but bit bit um when crude kind of went north of 100 we took a lot of our energy length off I think those are those are probably the most actionable thing uh we did uh we did add to private equity sponsors in sort of like uh March April ish.

So, we don't really like private credit, but we do like the private equity sponsors. And so, we've we've we've we've allocated more in that direction. >> What asset class do you think is overhyped today? >> I think there are probably a number. Private credit because it's easy. >> Why do you not like private credit? I'm I'm not in it. I don't understand.

Yeah, I I'm not in it and I don't understand either. Um, >> but is it just returns? I remember I had a girlfriend who did private credit and she told me it was like crap returns and I listened and I was like, "Yeah, you're right. It is crap returns." Well, I think that I think there's I think I think effectively what is happening is that you have credit exposure in companies that looks and acts a lot like equity to the downside, but you don't have upside equity returns.

And so I think the riskreward profile is kind of off, right? So we prefer equity to that. What other endowment fund do you most respect and admire because of their buildout and why them? >> Brown without question. >> I just have like a ton of respect for Jane and the team that they have um built there. I mean it's also the case that their returns are better than ours um at least over you know the last 10 years.

I think I think our returns might be better than theirs over the last five years. Um, but we've got a lot of wood to chop to, you know, kind of catch up to to where they're at. They are are they are what I would describe as real investors. Um, they'll they'll do things that um take a lot of courage. Um, I'm not saying that they're riskier. Um, but they're thinking through the risk return profile of things and like placing, but they've just done an extraordinary extraordinary job.

And not like I know Jane, we we talk and chat and whatever. I just utmost respect for that team. >> Which fund are you not in that you would most like to be in? We mentioned some of the big names. >> Probably Benchmark. >> Be the same for me. Yeah. >> Yeah. Ton of respect there. >> Final one for you. What are you most excited for in the next few years?

>> I do think that uh biotech is going to be even more impactful over the next 10 years than it has been over the last 10 or 20 years. So, um we're spending more time on that. In fact, uh later this week, I'm I'm headed to a biotech conference and then again in October. So biotech is something that we're actually spending a lot of time on. Um we certainly have like a lot of biotech exposure.

Um but we're wondering if we should have more even. Um it see it seemingly is less correlated with um certainly the science is less correlated with markets but what scientists are doing uh these days and actually like solving diseases as opposed to simply treating symptoms is is extraordinary. Um, so biotech certainly is something that's like kind of high on the list and that we're spending a bunch of time on.

Aside from that, like from a personal perspective, I'm really excited to see, you know, our team, our office build out over the next three years. I as I've done this I think that there is really a major inflection point that happens when you are $1 billion going to $5 billion and we're kind of like right in the middle of that. Um, and so we were dealing with all of the issues around, you know, how do you grow a team?

What systems do you set up so that when you're at 5 or 10 billion dollars, like you can actually keep track of everything? How do you systemat systematize things so that this is a self-perpetuating office, etc., but retain the creativity to continue to do this the new new things that you've done in the past to get here. But there's a lot of decisionmaking that has to go on between one and $5 billion.

And I didn't really appreciate that until kind of being in the middle of it over these last couple of years. We're sort of like halfway through it, but I I kind of think in the next two to three years, we'll kind of get out to the other side and then be like off and running. Um, so that that at a personal level, that's that'd be tops for me. >> David, I've so enjoyed this.

I I'm very grateful to you for putting up with my varying questions, naivity in certain cases, but I've loved it. And so, thank you so much for joining me. >> Yeah, no worries. We're down here in central Texas trying to do a good job. So, thanks for having us.