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WSO Podcast | E117: MD in Private Equity Secondaries - The Quant Research Angle

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In this episode, Avi shares his unusual path from investment banking, to running a magazine start-up and then back into investment banking two years later. After that re-entry into finance, Avi was able to lateral to an IR role at a private equity fund and eventually became COO of Riverside's European Fund 7 years later. Finally, he made the bold (and I'd argue crazy) move to pursue a phD while working and everntually found himself at Landmark, a private equity fund focused on the secondary market, running the quant research division.

 

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WSO Podcast (Episode 117) Transcript:

Patrick (CEO of WSO): [00:00:06] Hello and welcome. I'm Patrick Curtis, your host and chief monkey, and this is the Wall Street Oasis podcast. Join me as I talk to some of the community's most successful and inspirational members to gain valuable insight into different career paths and life in general. Let's get to it. In this episode, Avi shares his unusual path from investment banking to running a magazine and then backed into investment banking two years later. After that re-entry into finance, AbbVie was able to lateral into an I.R. role at a private equity fund and eventually became CEO of Riverside's European fund. Seven years later, finally, he made the bold and I'd argue crazy move to pursue a PhD while working and eventually found himself at Landmark, a private equity fund focused on the secondary market. Super interesting path. Enjoy. Thanks so much for joining the Wall Street Voices podcast.

Avi [00:01:05] Thank you. Thanks for having me.

Patrick (CEO of WSO): [00:01:07] So you'd be great if you could give the listeners just a short summary of your bio to get started.

Avi [00:01:11] Sure, I'd be happy to. I'm a managing director in the quantitative research group at a firm called Landmark Partners. Landmark is one of the largest private equity, private real estate and infrastructure secondaries firms for people. Maybe I'll say just a couple of words about secondaries. A couple of words about quantitative research. People might not be familiar with that. Secondaries is it's about an $80 billion part of the private equity, private real estate and private infrastructure business. Traditionally, firms like landmark by diversified portfolios of LP interests and funds from large investors. More recently, there have been more in recent years trending more towards more complicated transactions. That's a bit on secondaries. We can talk more about that as you like. And quantitative research is applying some of the same types of quantitative tools that you might find in more sophisticated public markets over to private markets. That's pretty new and new market dates back to about 2009. And then about me, I'm just a little bit on me. I started off my career back in the late nineties at Lehman Brothers. I was an analyst at Lehman Brothers, doing mostly tech. Investment banking from there decided to go for my MBA. I went to INSEAD in France and then from there I ran a magazine for a couple of years. Then came back into investment banking, then over to private equity at a firm called the Riverside Company, where I was for about 10 years, then decided to do four to do my Ph.D. and then came into research. So there's a lot there and I'm happy to go and I love it. No, it's

Patrick (CEO of WSO): [00:03:04] This is perfect because it's super fascinating how you've touched on a lot of different things, different interests that I think our listeners will have. So let's just real quick, let's start away back actually at undergrad and was business and finance always on the radar? I mean, sounds like you've been in banking, private equity, you've been around that. So was that always something you wanted to do?

Avi [00:03:26] Yeah, it was. I was. I don't know how common or rare this is, but I'm someone who I I had probably always wanted to do something like this. And from the time I was in college, starting out in university, I knew that I wanted to do

Patrick (CEO of WSO): [00:03:41] Was, where is your family involved in it? What was that? Why? Why do you think that was?

Avi [00:03:45] You know, that's funny. No, I don't know. My family's all in medicine.

Patrick (CEO of WSO): [00:03:52] Mine, too.

Avi [00:03:52] Well, yeah. So I guess maybe there's some kind of trend that people who have families that are in medicine come over and do this. No, as far as I know, I'm the first person in my family, in my, you know, my parents, grandparents. As far as I know, I'm the first person who's ever done something like this. But I've always been interested in economics. I've always been interested in the world of finance. It's such an important part of life, and there's so much interesting that happens in it. And it's so important economically. I've always been interested in that.

Patrick (CEO of WSO): [00:04:24] You came at an interesting time. It was kind of like the dot com boom and everyone was excited and 98 for somebody to go into finance, like, why wouldn't you go to a startup? Then, you know, people, a lot of our listeners were like just getting just being born then. But we're not even born yet. But in terms of just. History, it was like a very exciting time in terms of Silicon Valley and kind of similar to now actually, where there's just so much hype and really high valuations. Back then, it was all about eyeballs, right? If you just had some eyeballs, people were giving you skyrocketing valuations. But anyways, tell me why. Tell me about your transition out of undergrad into Lehman. And kind of where did you start out as an analyst because it says associate on there? I knew you were there for three and a half years. Or do they promote you?

Avi [00:05:12] Yeah, so well, I think there's a story there that relates probably a bit to dot com as well. So, yeah, so I started out as an analyst. I actually did my undergrad in Israel. I went to university there. After that came to Lehman, they ended up sending me from New York to the Tel Aviv office. If my numbers are right, I think the Tel Aviv office might have been like 10 percent of Lehman's IPOs or something like that, because it was it was very tech heavy. Right? Like, back then there was a lot of maybe a small, but there was a lot. There were a lot of IPOs in Tel Aviv. Israel was a meaningful part of it at that time.

Patrick (CEO of WSO): [00:05:56] It's a huge part of the startup culture nowadays.

Avi [00:05:58] Oh yeah. Yeah, yeah. And as I recall, there were, I think, a bunch of us who were just promoted after two years of being the analyst program were promoted to associate. I don't know how common that is now. I don't think that was very common then, but I think just the market, right? Everyone.

Patrick (CEO of WSO): [00:06:19] It's happening more now, but I guess they were so busy you were getting paid so well, doing so many IPOs, it's like, why not stay on right? Was that the thought process?

Avi [00:06:26] Well, and I think a lot of people had offers from tech companies. A lot of people had offers from venture capitalists, right? Because that was a great place to be. So I'm saying this from memory now. I can't verify this, but I remember that, right, there were a bunch of people who left to go to different opportunities. And I seem to recall the firm coming to the conclusion that they needed to find

Patrick (CEO of WSO): [00:06:49] A way to hang on to you guys,

Avi [00:06:50] People. All right.

Patrick (CEO of WSO): [00:06:51] So that's good for you. I mean, they probably paid you really well, good bonuses for a few years during the boom. And then, you know, I assume the timing is not coincidental that you went and got your MBA. It seemed like during you left Lehman around November 2001, that was right when everything was crashing. I.

Avi [00:07:09] Yeah, that was right around. Then I had decided that I wanted to do an MBA already. I do think, you know, I don't know if that was a particularly good time or a particularly bad time to do an MBA.

Patrick (CEO of WSO): [00:07:19] I'm not a good time to do a one year MBA.

Avi [00:07:22] Probably that's probably right. I'm not a good time to do a one year MBA because yeah, you came out and not the best time economically

Patrick (CEO of WSO): [00:07:33] At that point. But tell me about what that was like because I think there's a lot of parallels to today. So kids going, getting, they're thinking of still getting their MBA starting in this this fall. What would you or kids going into their second year, potentially who now don't have the decision to defer or anything like that? They just have to keep going? What was it like coming out of INSEAD and you already you're already in Paris? Did you know you wanted to come stateside after what was the decision or to do the publishing business?

Avi [00:08:03] Yeah. So after my MBA, I was not sure exactly what it is that I wanted to do. I.

Patrick (CEO of WSO): [00:08:12] So yeah, let me let me back up there like, you had a great job at Lehman, theoretically, right? You're getting paid well, is it? Were you thinking, maybe I'll be a banker for life? And then just it's just the hours are too grueling and you thought, maybe I just need to reset, step back a little bit and kind of just get better perspective. What was the thought process going into the MBA?

Avi [00:08:32] Yeah, I've had, I think, an interesting path. I've always been within this, this industry, with the exception of those two years doing a magazine, which I'm which I'm of course happy to talk about. I think I probably learned pretty soon that I didn't really enjoy being a deal person. I really like the industry. I really liked finance, but deals. I think they're exciting for a lot of people. But there's also a lot of especially in types of investment banking deals where you're doing the same type of process again and again and again. And that can be if you're doing IPOs, right, you're doing similar work each time that you're taking a company public

Patrick (CEO of WSO): [00:09:14] And you're doing IPOs for the full three years. Plus you were there pretty much.

Avi [00:09:19] Yeah, OK. And there are other I wanted different types of challenges. I had actually thought when I was an undergrad, I had thought of going for a Ph.D. at that time. And one of my professors talk me out of it. I remember, he said, then that you could make a lot more money practicing finance. Then than getting a PhD in economics, which was probably correct. Yeah, it was correct, but correct.

Patrick (CEO of WSO): [00:09:51] It's probably still is correct today, but OK,

Avi [00:09:53] It probably still is correct today.

Patrick (CEO of WSO): [00:09:55] It doesn't mean you're fulfilled.

Avi [00:09:57] However, I think that's right, and I had a desire to do something else to try something else so I could have come back into investment banking after I finished my MBA. You have an offer from I did. I mean, I was speaking with firms I burned, pointing out to me too, and I could have. Yeah, but I decided at that point that wasn't something that I wanted to do.

Patrick (CEO of WSO): [00:10:23] How did you come across this? I'm going to start up my own thing.

Avi [00:10:27] Yeah. So we started while in business school, a couple of friends of mine and my wife. We did an entrepreneurship course there and we started a magazine. It was a women's romance fiction magazine. That was what we had the idea for it. So very different than banking. Yeah, it was. It was an interesting business. We entered it into a business plan competition at INSEAD. We didn't win, but one of the judges came up to us after and said, This is really interesting. I'd love to get involved with you guys if you're if you're interested in doing this. So we took it. We ran it for a couple of years with

Patrick (CEO of WSO): [00:11:10] Some funding involved with that.

Avi [00:11:11] Yeah, we

Patrick (CEO of WSO): [00:11:12] We go round or whatever.

Avi [00:11:14] Yeah, we raised some money for that. We were doing actually pretty well. We were nationally circulated. We were I think I remember we were on the verge of going into like Wal-Mart and wow, you know,

Patrick (CEO of WSO): [00:11:28] This is the U.S.

Avi [00:11:29] Yeah, this is the U.S. Yeah. And we were in all of the major bookstores, but we were on the verge of going more mass market than that. But funding was difficult. I mean, even then, you know, online was really becoming much stronger than print magazines. And how to monetize that was a little bit difficult. So that got me more and more interested in fundraising, which is actually one thing that I tried for a little bit when I came into to private equity. Yes, so that that was an interesting experience, I think having the entrepreneurial experience was great when I ended up coming back into investment banking after that. That was, I think, something that was useful in dealing with entrepreneurs and business owners.

Patrick (CEO of WSO): [00:12:16] I mean, you were coming back and the economy had started kind of picking up when you got your job back at Lazard, right?

Avi [00:12:23] Yeah. Well, it's what's now Lazard Middle

Patrick (CEO of WSO): [00:12:25] Market, right? So you. But you had Lehman on your resume. Super strong shop and you, but you still did this kind of entrepreneurial thing for listeners thinking they want to go do their own thing. Was it tough to kind of tell that story coming back like make them believe that you were ready to kind of grind away again?

Avi [00:12:43] Yeah, that's a good question. It was it was certainly not something that most people do, right?

Patrick (CEO of WSO): [00:12:51] I'm just saying, like in the interviews where they pushing you hard on that stuff. If you remember, I know it was a long time ago.

Avi [00:12:56] Yeah. No, I think people did, right? I think that was a question of, you know, you were in banking and you were in banking, you were doing well, presumably you right? Why do you want to? Why were you doing that? Why do you want to come back? I think that was right. It probably would have been an easier path, right? Would have been the path of least resistance would have been to stay in banking throughout. But ultimately, I mean, I don't know how easy it is now for someone at a junior level to go out and come back in. But it is something that I was able to do, and I really liked it when I like the firm that I came back to, but worked

Patrick (CEO of WSO): [00:13:39] Well to tell me you were there for a couple of years and then how did this? How did Riverside come, come along? Was it something like you were? You were looking? Tell me about how you thought about the next role you wanted to have because it sounded like. The second time banking, you're like, OK, this is really it, I'm out, I'm going to find something long term. What was the thought process where you were an associate again? So was it? It's a really tough job. So be associate. You're having to manage the analysts. Luckily, you had done it before, so you probably had more respect from the analysts. And then up above, you're still like managing up a lot, right? So you're getting pretty basically attacked from both sides. So tell me about like just surviving those next couple of years? And then what were you thinking in terms of like your career? What were you? You're saying, OK, I'm not really a deal, guy. So what did you think of next? How did you what was your thought process around that? Or is it just whatever you could find that you felt was like going to be the best career track?

Avi [00:14:39] Yeah. And so, so  first thing is the firm that I went to afterwards, the  investment bank that I went to, I really enjoyed there were there were the people there were  great people, both the people who were above me and the analysts who were below me. I really enjoyed working with them. I, though, you know, as you said, I wanted to try something different than doing deals. I had become interested in fundraising because of the magazine experience. And at that time, Riverside, as I remember, it was starting to think about fundraising, was starting to think about having a professional fundraising team in place. And even though, you know, you could think about my, my, my resume and say, Well, would you look at my resume and say that this is a sales guy who you're going to have join and do fundraising? But I think back then, how many people really were there who were doing that? I think the right, the job of in-house fund placement was smaller. And one of the head hunters that they were working with thought, you know, I know this guy, Harvey. I think I knew him from when I was looking at coming back into investment banking. Yeah. And he made the connection. I think he'd be really good at this because, you know, he really understands the weeds of the deals, the numbers. What's going on can communicate that with LPs, but also is a, I guess, a reasonably outgoing guy. Someone who we could see selling on the road isn't going to embarrass us. So I ended up doing that and then I ended up staying there at Riverside for about 10 years.

Patrick (CEO of WSO): [00:16:21] Yeah, so long run there. I mean, you had you wore several hats to the right, so you initially were in that kind of fund raising investor relations role. Did you can you talk about a little bit to the listeners, like the progression of someone like that because it's different than the deal professional or investment professional there, right? Yeah. And the day to day, what that's like there as investor relations, like, are you on calls all day or are you on the road all the time? What was it like?

Avi [00:16:46] Yeah, it was. It was both of those calls and on the road. And I think most of what I've done in my career other than being an investment banking associate had been something that there just wasn't a very established career path before I came in and started doing it. So. I'm at that point. There were a lot of phone calls to LPs, as you're talking about a lot of traveling, going to meet current LP is going to meet prospective LPs. A lot of figuring out strategy. A lot of working with the management of the firm, with the senior management of the firm, with the different investment teams, the different products, figuring out strategy for fundraising. It is like you're saying it's very different than a deal role and a deal where all you're spending a lot of your time on the LBO models. When you're at the more junior levels, you're spending time getting into the companies. So you could think of, you know, the people who are doing deals, they're more into the companies. The people who are doing fundraising are more into the investors. One of the other things that I used to joke about is that the fundraising team had much better travel than the deal teams did. Because, you know, when you. Yeah, because when you think about where we're mid-market companies are versus where large institutional investors tend to be, you know, if you like being in large, exciting cities, right, the fundraising can be can be a place to do that.

Patrick (CEO of WSO): [00:18:20] It's interesting. And so tell me how you felt. I mean, was it true that the technical aspect of your previous role actually helped? Or was it more like you had a lot more to learn on sales and or was it probably helped you, I guess, with dealing with the actual senior management at the Riverside? But was it? How do I get my question really is just the challenges of it, like coming up through because you are kind of carving out your own role there and like being able to deliver that value? Did you find like there was just so much to do in the fun was big and the funds were big enough that there wasn't any fear like you were able to immediately add value because there was just so much to do and so much strategy to speak of. Or was it like you had to find out what to do?

Avi [00:19:05] I think there

Patrick (CEO of WSO): [00:19:07] Is your way like that first year, was it scary because they were just like, throw you give you an office and then like you had to figure out what to do? Or was there a lot of like immediate kind of taking you and bringing you into the senior leadership to like, strategize?

Avi [00:19:19] Yeah, I mean, scary, scary, but also fun. There was back then I was still pretty junior, so there was someone within fundraising who was above me in that. But still there was a lot of figuring out. I think that was a time in general in the industry where people were firms were moving from more deal partners, doing all of the fundraising towards having people outside doing or having in-house people who are full time fundraisers. And I think also to your question about technical skills, I think that over time, over an extended period of time, there's been a bit of an evolution in that role. I think that there was a time when that role was really more salesy and it was someone who could sell anything. Someone who could sell cars could sell private equity funds. So you had people who would come from backgrounds that weren't necessarily finance, but were more, salesy. I perceive that now LPs tend to have some pretty sophisticated questions, some pretty sophisticated needs. So they want to know that if they're speaking with someone in a fundraising and an air group now, they're going to know that you might not be able to get into the weeds of a specific transaction to the same degree that someone who did that deal would. But they also want to know that they can talk with you about more complex topics regarding the fund or investment.

Patrick (CEO of WSO): [00:20:51] You'll be like, OK, why do you guys do this dividend recap here or something like something along that? And you're not going to be like deer in headlights?

Avi [00:20:58] Yeah, exactly right. So, so, so they're going to ask you, why did you do this, this dividend recap here? Ideally, you'll have an answer for that, right? Ideally, you'll just be able to explain where it is. But as you're saying, at a minimum, you're not going to look like a deer in headlights and say, what's the dividend recap? Right? At that point, they're going to say, OK, I need a different contact here within the firm

Patrick (CEO of WSO): [00:21:19] Makes sense,

Avi [00:21:20] Right? And also, to the extent that you can get in that you can get deeper into the weeds that you can have a more substantive conversation, the more value you can add.

Patrick (CEO of WSO): [00:21:31] That's right. So tell me a little bit about you. You're there for a long time and your titles were changing as you got more senior, you even went to Belgium. Tell me a little bit about that. Why? Why go abroad and what the opportunity presented to you as and why go?

Avi [00:21:48] Yeah, so that started originally. They have a European business, a good European business and also at the time, you know, we're looking to grow that out further to grow at the business, grow out the investor base in Europe. So we need to have someone there. And I guess having, you know, having spent a lot of time in Israel and having spent some time in France that maybe almost European. I guess you were the guy. I was the guy. Yeah, so I ended up going there for that. And then I ended up doing fundraising investor relations for them in Europe also. And then eventually that transitioned to the chief operating officer role in Europe, which is still involved with fundraising, right? So that was still even when I did that fundraising, and I was still a meaningful part of what it was that I did. But then there's more because you're also much more involved in managing the organization

Patrick (CEO of WSO): [00:22:52] And how many people were there were there when you were at its largest, when you were CEO there?

Avi [00:22:58] I want to say and don't hold me to this, but I want to say maybe about 40

Patrick (CEO of WSO): [00:23:02] Is pretty good size. And so what about half of those are investment professionals and half are like accounting admin staff, that type of stuff?

Avi [00:23:09] Yeah, something like that. And Europe, you know, Europe can be particularly interesting for there, a pan-European fund. Yeah. And because of that, a lot of what happens is cross-border. And that means that, you know, if you're if you're a company in New York buying a company in California, that's a lot less complex than if you're a company in Belgium buying a company in Italy. So you need more back office support in an environment like that.

Patrick (CEO of WSO): [00:23:40] I can imagine probably extremely complex at work. I worked at Rothschild and they did a lot of cross-border M&A as well in Europe, so I saw a little bit of taste of that when I was training in London. But wow, I'm glad I'm not doing that anyways. Tell me about your progression. Like when was the time? When did you feel like it was time to move on? Was it something where you were recruited out of riverside? Or it was an. You're looking for a new challenge.

Avi [00:24:07] Yeah, so I started going for my PhD while I was at Riverside Europe. Well, actually, I did it in the States. I had some, some rough commuting for a period of time, but they were very supportive. I mean, they were I say, I can't say good enough things about the farm. They were very supportive. I had a great relationship with them. They understood what it is that I wanted to do. So they allowed me to do that.

Patrick (CEO of WSO): [00:24:39] It's just crazy to me. That's so late in your career, you decided, Hey, I'm going to go get a Ph.D. on top of running an entire office.

Avi [00:24:46] Yeah, it's weird right now

Patrick (CEO of WSO): [00:24:48] A little bit about just like the intellectual curiosity that you had in order to. And just the time the hours that you were giving to to being in the office, but also that the hours, just the hours you were giving to just a PhD, like what was what was your typical week looking like when you were in the midst of trying to write your thesis and.

Avi [00:25:12] Oh, the time was incredible.

Patrick (CEO of WSO): [00:25:15] The family at that point, too,

Avi [00:25:17] I did, and my youngest daughter was born, I think soon after I started the PhD, I have two daughters. One's  11 one six. The time was rough. I mean, riverside again, as it was, was, was very understanding. But still, that is a full time job. Plus, and I was probably putting in another 30 hours a week on the PhD. So I was it was like back to analyst times, you know, as much as I said that doing deals wasn't really what I wanted to do, that that hard work, that work ethic has never bothered me back. My wife told a boss of mine at some point that I get bored if I'm not busy. I said, You know, I don't know if you should really say that, but that is something that I've always had. So it meant that I was working hard during the week. I tend to be a morning person, so before I'd go to the office, I'd get in. Typically a couple of hours on the FD, I was traveling back and forth. The weekends meant that I was doing a lot of work because if I was doing work during the week, then I'd be doing PhD work on the weekends. So it was.

Patrick (CEO of WSO): [00:26:32] How did your wife approve of all this? I don't understand. I have three young kids. If I was working 70 even 70 hours, I'd be getting a lot an earful.

Avi [00:26:42] She was she was very good about it. But it it was a lot of work. I mean, I would say and I've had this conversation with other people, if people want to think about doing what I did, it can be a very fulfilling opportunity. You know, someone who wrote me a recommendation when I first applied gave me some good advice, which is that if you want to do a PhD at this point, you have to know for certain that this is something that you want to do and this is something that you have to do because you really want it. It can be something that you're doing just because you think it's a professionally good thing to do because there will come a time, you know, not that far away when you realise how many hours you're putting into it and you're going to have to be comfortable with that and that that turned out to definitely drive. I found it to be one of the most fulfilling experiences that I've ever had, but it was absolutely a ton of work.

Patrick (CEO of WSO): [00:27:47] Tell me why. Tell me, like what? What about it is just, you're an intellectually curious person, it seems in general. So you did you have this question kind of already formed in terms of something you wanted to go after and look at? It was obviously related to private equity, correct? You want to give up just a brief kind of synopsis of your of your thesis and what you.

Avi [00:28:06] Yeah. So I started out at the beginning. One of the reasons that I wanted to do it is that I was intellectually curious. Another reason that I wanted to do it was because I was there were questions that would come up when you're involved with running an organization or when you're involved in investing in private equity that people will try to figure out answers to. And I just figured there has to be research work on this. There must be academics or consultants who have looked at this

Patrick (CEO of WSO): [00:28:38] And they had not.

Avi [00:28:40] Well, it's something right and a lot of things I had not. I mean, and some things I have. And there's a lot of great academic work that goes on that doesn't find its way into practice for interesting reasons and also a lot of really important questions that practitioners have that don't find their way into research. So the original topic that I wanted to look at, which ended up not being the topic I was interested in cross-border M&A. This goes back to what we were talking about talking about right before. Yeah. And I was very interested in the idea of the effect of culture on cross-border M&A. I had a sense that when you had two companies that were culturally, this is going to sound obvious, but I think this is again a topic where how much of people research is that when one company buys another and they're culturally very similar, maybe they're from the same country or the same region or have other aspects of their culture that are similar? The M&A tends to be much more successful than if you have two companies that are very different in their cultures. And I was interested in getting deeper under the hood of why that is and what that means. And if you're a private equity firm and you're looking to do an add on of a company and you see a great add on, but it's in a very different culture.

Avi: [00:30:04] You know, what can you do to make that work and what might be some predictors of that working or not? So. That was my initial interest. I ended up not pursuing that. What I came into. I was one of the first courses that I that I took in. The PhD was this was actually a psychology course and organizational psychology course, and we got into some of the research on highly skewed distribution. So we were looking at. Then it was power law distributions and this idea, right? The 80 20 rule right out of the this idea that a very small percentage of people produce the majority of value, a very small percentage of companies or the vast majority of market cap. And I thought, this is fascinating. I've got access to some pretty good private equity data. Let me see if private equity tends to look the same. And I looked at the data and I saw, you know, Oh my god, this does look very similar. And it turns out that private equity is is pretty skewed. So then I started looking at what are what are some of the predictors of outperformance in private equity? And what are some of the things that that might lead towards some firms, some companies being extreme outperformers producing the lion's share of value?

Patrick (CEO of WSO): [00:31:35] So what's the answer? I just can't. Was there an easy answer or was it was this insight that you're that you're able to share?

Avi: [00:31:43] Yeah. Well, I think there is no one simple answer to that. But there are, you know, the ideas is really interesting. There was a paper that came out, I forget if this was in twenty seventeen or twenty eighteen and if I'm quoting the statistic correctly, it was something like between nineteen seventeen and twenty sixteen. Four percent of publicly traded companies created one hundred percent of value on U.S. stock markets. And that doesn't mean that the other ninety six percent all created no value. It just means that within the other ninety six percent, those that made money only made enough to make up for the ones that that that lost money. And there are interesting implications. There are questions about why does that happen? But there are also questions in this gets into, you know, research or questions about portfolio construction, right? If you know that portfolio construction about diversification, if you know that a small percentage of companies create the majority of value. What does that mean?

Patrick (CEO of WSO): [00:32:47] Isn't that even more? Isn't that even more the case nowadays with tech, like with Amazon eating everything and Google eating everything? I mean, is there ever a time where this would? It feels like it's getting even more and more skewed on that side with the help of tech like it's the inequality, just like all the bigger, just getting so much bigger, so much faster. Maybe I'm maybe I'm wrong, but I don't know. I mean, there's still the Walmart there, but they're trying to like, I mean, in 20 years what it's going to, what are they going to look like?

Avi: [00:33:17] There is an idea that I was in a couple of Nassim Taleb books. Sorry, that's my phone. Sorry, sorry about that. Yeah, there is an idea. I think this was in one of Nassim Taleb books that with globalization, with the increasing ability of companies to scale, you see more of that winner. Take all income. Right, right. He had the idea I remember from one of his books, his idea that there was a time when you could more easily be a traveling musician in the town and people would come to listen to you. But now you're competing with people who are much more talented than you are, who are or who have recordings or who people can travel to see in larger concert halls. So I think it is true that just as the world is becoming more globalized, more technological, more scalability that that that effect is getting greater.

Patrick (CEO of WSO) [00:34:17] Yeah, for sure. It'll be really interesting the next 10 to 20 years, I think what where we end up, but tell me a little bit so you had it took you about four years to get that is pretty fast working full time to get the PhD.

Avi: [00:34:30] Yeah. And yeah, that was during that time that also leads to the landmark in that landmark where I am doing research that actually they gave me the data for a couple of the studies that I did during the PhD. You know what, one thing also when you talk about, you know, when you talk about for years doing the PhD, I think one advantage that I had is that the research that I was doing was very practical to the type of work that I did. So I had said that the folks at Riverside were very supportive. I imagine that if I wanted to do a PhD in Sanskrit, they wouldn't have been. But, but because it was, it was it was useful. It worked out. And then it also led to a great transition because while I was there, you know, Landmark gave me data for a couple of my studies. It turns out that the head of quantitative research at Landmark got his PhD at the same school where I did, which was an interesting connection. And then, you know, after that, I was thinking of going into academia, but I called him and said, I'm interested in doing what, what, what you do? And he said, Wonderful, why don't you come on board?

Patrick (CEO of WSO) [00:35:45] Awesome. So tell me a little bit about that. So what? Why? Why not go into academia? What were you? What was kind of the balancing act of like, OK, I can make no money or I can make a little money? Is that basically is that fair? Is that a fair? Like, I mean, because you had kids at this point, I don't blame you. You know, use some of the knowledge you had gained and by the way, going to do your PhD. Did you have a quant background that you were able to? Or was that all learned during you had a quick background earlier,

Avi: [00:36:15] So

Patrick (CEO of WSO) [00:36:16] Because it didn't seem like you're not here, an investment banker, you're not doing like statistics?

Avi: [00:36:21] No, that's right. And so, you know, going back to undergrad, I did a very quantitative undergrad degree. But you're right. I mean, when you're when you're doing investment banking or this type of investment banking like I was or you're doing buyouts, you're not doing quant in the way that you typically think about quant. I've always been quantitatively minded. So also, when I went into the PhD, I really dived into that. So it wasn't like I was a math phobic coming into it. I'm someone who's always really enjoyed that. Yeah, but it was a good, you know, reintroduction refresher deepening of that,

Patrick (CEO of WSO) [00:37:04] And you kind of wanted to stay in that realm. You didn't want to be the fundraising person anymore. You wanted to dive deeper or you were willing to do both for landmark. Tell me about that.

Avi: [00:37:14] Yeah, I mean, it's I really enjoy working with investors. You know, I wanted to, you know, to to follow that intellectual curiosity. They you're talking about, which is a big reason for wanting to do the PhD to answer those questions. But it really wasn't that I didn't like doing the work with investors. I really like those interactions. The hearing, what people think, the hearing, what people are.

Patrick (CEO of WSO) [00:37:48] It's super interesting and you're getting you're getting insight into all different types of funds and different their concerns, the ALP's concerns you're bringing that back. It's probably a very fun exercise. I'm just saying when you're coming out of your PhD and you talk to the head of quantum research or whatever and landmark you did that, you specifically targeted that. Yeah. Because you just serendipitously happen to he happened to go to the same school or what? Or were you talking to other research people at other funds and trying to trying to get your way into a fund like this or a secondary?

Avi: [00:38:22] Oh yeah. Yeah, that's there is some sort of pity or luck. I mean, I I didn't I definitely didn't go into the PhD saying that I want to end up at at landmark. I was thinking when I went into the PhD that I, I knew that I wanted to stay, that I wanted to stay researching private equity. I wanted to stay researching finance. I didn't know if I wanted to do that by staying in academia, by going to academia or if I wanted to do something in practice that that relates to that. You know, one of the things that led me to decide to do it in practice rather than academia. I mean, you are correct. I think people are paid more and the in the in the investment side than in the academic side, though. So, you know, academics to do things like this, I don't think they're paid that badly. But you know, the compensation is presumably greater here. But it was more that I wanted to have that academic background. I wanted to have the Kwan chops. I wanted to do the research, but I still wanted to have a meaningful, practical impact. And in academia, oftentimes, at least in my experience, people are more interested in the theory.

Avi: [00:39:41] Then we're interested in where the literature goes and there are less immediately interested in the practical takeaways. You know what, one of my professors when I was doing the PhD was talking. I think this is an interesting metaphor or story about this that was comparing people who go for their PhD when they're a little bit older, more advanced in their career, whereas people who go for their PhD right out of university. And the idea was that people who go for their PhD right out of university spend their first couple of years diving into a stream of literature so they know everything that there is to know about something in finance or something in strategy or something in management. And then they try to figure out what do I want to research and because they haven't had a professional career yet. They don't really know the problems that people in professional careers want to solve. So they go to conferences, they read literature, they try to find somewhere that they can find a gap and then try to fill it. Ideally, it'll be useful for people in the practical world. But you know, maybe not. On the flip side, people who come later in their career to do a Ph.D. are crazy.

Patrick (CEO of WSO) [00:40:50] No one. But yeah, go ahead.

Avi: [00:40:51] Well, our crazy right. So it's not someone, but number two, we're chock full of problems, right? Right. A lot of us came for the PhD because we have mountains of problems that we want people to be able to help us solve. But the problems that we have aren't always academically interesting. So we kind of we kind of go the opposite way. If you're coming right out of undergrad, it's how do you take an academically interesting problem and make it practically useful? And if you're coming from from where I was, it's how do you take your mountain of practically useful problems and make them academically interesting?

Patrick (CEO of WSO) [00:41:24] That's a good point. Yeah, it's interesting. You're coming out it a completely opposite angle. So tell me. So when you kind of started, were you immediately able to apply some of the stuff that you had, the new skills you had learned? Was it, how big was the team? I guess the quantitative team when you kind of jumped in landmark and tell me a little bit about what you're able to share with the listeners in terms of kind of what your group does at the fund and maybe a quick summary again on secondaries and all that.

Avi: [00:41:51] Yeah, sure. So quant research at Landmark is today. I think we're about 21 people, but that includes it's either seven or eight analysts, all of the analysts, right? So right out of college, who will ultimately go to private equity or infrastructure, start off in quantum research, so can talk about what it is that that that we do. So, so first, secondaries again, secondaries is in the traditional business that's buying diversified portfolios of fund interest from LPs. So if you're a large state pension fund and you want to sell you, you have a portfolio of real estate fund investments or private equity fund investments that you want to sell a secondary. His firm is a great place to buy them from you. It's gotten more and more in recent years towards more complex, structured transactions. Maybe you're an LP or GP that has a specific financing need that might not translate perfectly to selling a given portfolio. So a lot of work goes around that that now secondaries lends itself very well to quantaray search because you're building big diversified portfolios. The secondary fund might have several thousand. Companies that are within it, or it could be anywhere, probably from several hundred to several thousand companies, which means you can really start to think about companies like portfolio construction concepts like portfolio construction, diversification risk. How do we want to look relative to a benchmark? You can. You can start thinking more about manager quality and some more systematic ways. You know, if you're if you're a primary private equity fund, if you're at

Patrick (CEO of WSO) [00:43:36] The CEO level, at the actual firm level and or you're saying, look at like the average score of the CEOs and the specific portfolio that you're looking at purchasing, or there are other ways like looking specifically at, like when you're buying interest, you're typically they're not saying you can't cherry pick the ones you want right in that portfolio in that basket or can you?

Avi: [00:43:57] It would depend on the on the type of transaction. Yeah, but right, so it can be. But manager quality, the idea of manager quality is, you know, is this is this fund that I'm investing with this fund that I'm buying an interest in. Is this probably a more skilled private equity manager or is it probably a less skilled private equity?

Patrick (CEO of WSO) [00:44:21] So you're talking at the company level, you're talking at the private equity level,

Avi: [00:44:24] At the private equity. Now there's work that can be done at the company level. Also, there are also some private equity firms and some venture firms that are doing work at the company level to try to make those types of predictions as well. I think it's harder if you're doing it at that level because if you're a private equity firm and you have maybe 10 or 15 companies in a fund, it can be more difficult. But it can be more difficult to think about portfolio construction, right? Because any one or two companies goes wrong or goes very right can make your portfolio. But if you have five hundred or a thousand or fifteen hundred companies in a portfolio now, you can really start to think in terms of probabilities and predictions. And right, there's less of a chance that one outlier that you didn't expect is going to change things meaningfully for you.

Patrick (CEO of WSO) [00:45:15] That's fair. So do you feel like the work you're doing? Is leaned on heavily in all the decisions that are being made. Like, is it something where the quant is kind of in conjunction with just whatever the best deals they can because there's still the art of negotiation with the LPs and with the like? Obviously, you end up getting to OK, here's the number right, here's the note we're going to buy this whatever five hundred dollar interest or whatever, two in a million dollars interest and. Guess what, like, it's actually an incredible deal. Forget about whether the private equity was good or not. Like we, we get a sense of the underlying value of these assets as closer to three hundred or so. I'd love to hear a little bit about how much your team of 20 or so, how much the work you're doing is actually like they're leaning on that on a day to day basis. Or is it just.

Avi: [00:46:06] Yeah, yeah. So all of that plays into it and you're hitting on a number of key points whenever you're looking at buying. You know, it could be a portfolio of fund interest. It can be an asset and a company. You're thinking about what is it really worth right for some versus what the reported nav is? What is it really worth versus what I'm paying? You're thinking about what's the quality of the manager? You're thinking about what might happen if there's a downside economic environment that a little bit familiar with, right? We're a little bit familiar with now. So all of these are important questions, and all of these are also areas where research has something to say, where we're able to analyze patterns and data, we're able to analyze historical trends. We're able to help to help provide guidance, to help provide insight to the deal. Teams using some of the types of quant tools, the analytics that we have

Patrick (CEO of WSO) [00:47:10] For any standardization that comes in from, I assume a lot of the work is just getting the data cleaned and prepped. And how do you even get this data out of the LPs or are the funds directly or even from the funds, I assume. I remember when I was working in private equity, it was just, you know, preparing something for an LP and it was like, No, no, no, we've got to change this and that's not done right. Or wait, the is the math done or the funds came out on this day? So like, how much is there a sense that the data is good that you're getting or how much work is? Because that's like a huge.

Avi: [00:47:46] No, that's fine. Yeah, that is anytime you're doing any type of research gathering the data and the quality of the data is important that that's actually one of the advantages of being in private equity, private equity, private real estate infrastructure, being in a firm like this that in public markets, state is really easy to come by. In private markets, there are just fewer people who have access to good data, right? You really there's some data that's publicly available or data sets that are publicly available. Yeah, but a lot of the good data is really only available to people who have large portfolios of underlying assets. Yeah, and that's another advantage. You know, you could think about it that, you know, in private markets, you can't get access to the wealth of data that a public markets investor can get, but you can get access to data that that is is harder to come by because it's private markets data. It's also important to us when you ask about LPs, and it's important to us to also be seen as thought partners to them. So they want to come to us and they want to ask us questions because, you know, we provide this help internally to Lamar, but we can also be helpful to LPs and GP's who have questions like this to

Patrick (CEO of WSO) [00:49:15] Charge for that research.

Avi: [00:49:18] You know what I'm supposed to say?

Patrick (CEO of WSO) [00:49:19] Yeah, I know. I guess for let's talk a little bit more about just. If someone wants to follow in your footsteps, it's an outcast. What would you suggest for our kids, either in college right now that are a little more interested in the quantitative side? But they are interested in finance. What should they be developing nowadays, which is to be focused on?

Avi: [00:49:40] Yeah. So there are there are two areas that's a two areas of knowledge. You could say that that people coming out of undergrad who want to go into quant, I think should have one is knowledge of economics or statistics. Having that kind of background. And the second one is coding skills and also so not everyone is going to have that coming in. There are people who are going to be very successful and want without having those coming in. But those are two types of skills that you're definitely going to need to develop coming into a program. And if you have them coming in, that will be a bigger advantage to you if you want to go that way. One of the other things that distinguishes private market quant, I'd say, is that we have a variety of skill sets that we need to have. Someone put it to me once that to be good in private market quant, you need to have the quant chops to be able to analyse complicated problems. You also need to have the business sense. You need to be able to understand the private equity industry so that you're able to ask and answer questions that are really useful. And then you also need to be able to speak English in the sense that there are there are a lot of people in academia who speak academic more than they speak or either really understand the language. So you need to be able to explain complicated concepts in ways that you don't need to have a quantitatively oriented PhD to be able to get. But again, for people coming right out of college, I think those types of skills are useful, but also that type

Patrick (CEO of WSO) [00:51:31] Of are certain languages, python, maybe or in other languages.

Avi: [00:51:35] Yeah, I mean, I'd say, you know, our Python stuff like that.

Patrick (CEO of WSO) [00:51:40] Yeah. What else would you like to share before we call it anything else? I have your notes here pulled up. But in terms of where people can apply, you know, you said they can send their resume for your analyst program.

Avi: [00:51:55] Yeah, sure. If people are interested in learning about our analyst program, if they're in a college that has handshake, you should be able to find us via a handshake. We also have an email address for people who are interested in the analyst program. It's Info Web at Landmark Partners all one word info dot web that landmark partners dot com. So those are two ways that people can find out about the analyst program, and I guess I would also add, if I can, that please the analyst program at Lamarck, I think is a is a is an interesting place for people to be for, for people who want to be deal jockeys who already know that they like doing deals. Secondaries are a really interesting place to do that because you have large and increasingly complex transactions that people are doing. For people who are more quant oriented, there's a lot of really interesting analytics. You have the opportunity to be exposed to different asset classes and people. You know, if I use our program as an example, people who come into our program, you know, get an opportunity to be exposed to all of that. So they learn about quant, they get to do work with deal teams, they get to do work with investor relations and business development. And, you know, not everyone who's an analyst ends up staying on to become an associate and move up, but a pretty large percentage of them do. And it can be a great way to learn different parts of the business. And if you do want to explore whether you're more quant, whether you're more of a deal person, whether you're more of a salesperson, this is a good environment to start to figure that out

Patrick (CEO of WSO): [00:53:42] Or just do what Abby did.

Avi: [00:53:44] And so the hope that

Patrick (CEO of WSO) [00:53:47] I did over 15 years or whatever it was,

Avi: [00:53:50] You could do that too.

Patrick (CEO of WSO) [00:53:51] Yeah, no. So, yeah, I mean, it's interesting. Do you know what some of the analysts that have left, you know what they've gone on to do, other quant, what other compositions or have any of them gone into pure, more pure finance, pure p

Avi: [00:54:05] Or i believe all of the above. You know, they're there. I believe there are people who have gone into Dukwana in other places. There are people who have gone to venture capital or who have gone to private equity.

Patrick (CEO of WSO) [00:54:18] So people think of this is like a hedge fund versus a this type of control in terms of the day to day. How? How. And is it really?

Avi: [00:54:26] Yeah. And what you know? Yeah, yeah. A quant hedge fund in a strange way, perhaps a quant hedge fund might be even more quantitative if they if that makes sense. And in a hedge fund, you have, you know, much larger data sets. I imagine there are more complicated types of analyses, more complex types of analyses that you can do. Yeah. In a quantum hedge fund and private equity, we have less data. But the advantage is that you're able to do something that's a lot newer and you're able to have a pretty big impact. I mean, it's just it's related, but private equity, it's just quant is a newer field than it is.

Patrick (CEO of WSO) [00:55:18] It makes sense that makes sense. So tell me like I guess before we call it, looking back on your career is anything you would kind of give advice you give to your younger self, knowing all the long work and long hours you put in, would you? Would you change a lot or would you change a little or any specific advice you have for the younger listeners?

Avi: [00:55:36] Yeah, well, I found for me personally, I found that taking the path to find what I really wanted to do was very useful because each step along that path. I got closer and closer to what it is that I really wanted to be doing. I was very lucky thinking that I had some very supportive firms, some very supportive bosses, and I don't know that that's always the case for everyone. But for me, I had a very interesting path. I'd also say I I perceive that there are some people who like to have more of a defined path where they know every step of the way I start as an analyst, then what do I need to do to hit associate? What do I need to do to hit V.P.? What do I need to do right to move up the ranks? And yeah,

Patrick (CEO of WSO) [00:56:35] A lot of, well, I'll tell you. And on Wall Street races specifically, there's a lot of people saying, OK, so I'm going to go invest in banking for two years, private equity for two years, business school back to private equity. Then they say, then what? You're like a partner or you move downstream or whatever you have to do to try and reach the Promised Land. And so it's funny because there's people realize there's hopefully this podcast and through the hundred plus people I've spoken with, people realize it's a lot of different paths to success in a whole different range and spectrum of hybrid roles and interesting sub finance industries you didn't even know existed. So hopefully people are kind of this. This opens their eyes more, I think.

Avi: [00:57:19] I think that's right, and I've always been someone who's been interested in finding something new, right? Whether it be, you know, doing fundraising then or whether it be, you know, the CEO role then or whether it be research. Not that I was the first person to do these things right. Other people have done them, but it was still pretty new and there wasn't the same defined path that you get if you're doing just traditional deal work throughout.

Patrick (CEO of WSO) [00:57:51] For sure, it's a fascinating path. Thank you. Yeah, I think so. Anything else you want to share? Just try to find your. Any guidance in terms of how to find that without derailing your career. I mean, you did magazine publishing for a couple of years and still made it back. Should people be afraid of that, that taking that risk?

Avi: [00:58:08] You know, I wish I had a good answer for

Patrick (CEO of WSO) [00:58:10] That, because maybe now they should be afraid of it because it's a little more, you know, with the recession and maybe it'll be harder to get back in.

Avi: [00:58:16] Yeah. You know, honestly, I wish I had a good answer for that. I'm  happy that I've done everything that I've done and very happy that I've ended up that I've ended up where I am. You know, I don't know if someone were to come to me and say, I've been doing a couple of years and investment banking or private equity, and I want to leave now to do something entrepreneurial for a bit and to come back. I honestly don't know. I'd be interested in hearing other people's thoughts on that who are who.

Patrick (CEO of WSO) [00:58:49] I think it depends. It depends. I would say it depends on the idea. Why don't you get something else and build it on the side and see if you can get some traction first, like I do? Well, because that's what I did.

Avi: [00:59:01] And also, I would imagine that it depends on what you do, right, like thinking of quants, specifically, if you were to go and do something that was very quantitative to leave, to go for a Ph.D., or if you were to leave to do something that was very kwani and then you want it to come into quant, I think that would be a lot easier than if you were doing quantum for a couple of years, then decided to start a magazine and then wanted to come back. That might be a bit more of a challenge.

Patrick (CEO of WSO) [00:59:29] Any thoughts on any of those educational like certifications, anything that tends to help, or you have to get a PhD or. I know there's  one of these sites quantum that or something. Is there any of those that the certifications that you'd recommend or do you feel like there?

Avi: [00:59:44] Yeah, I don't think you need a Ph.D.. A lot of the senior people who do this and actually most, maybe all the senior people that I know who do this do have PhDs. But there are good, you know, there are masters and in financial mathematics, right? There are masters in financial engineering, which I think for this type of role are probably very useful also. We also have people who come in straight out, straight out of undergrad. We have we have a few people coming straight out of undergrad learn while they're in the analyst program that they really like doing. Quant, have a knack for it. Get get, get good at it and don't have a PhD coming into it. I suspect that that's something that in the coming years, if you know if as private markets quant becomes something that's more established, you might start to see that go. But I don't think you need to have a PhD for that right now. You need an interest in it, and you probably do need to be prepared at some point during your career to cap off the formal training that you have. That's fair.

Patrick (CEO of WSO) [01:00:56] Ok, lobby. Thanks so much for taking this almost hour, I think, to chat with us and to share your interesting path and all your advice.

Avi: [01:01:07] Thank you so much.

Patrick (CEO of WSO) [01:01:08] And thanks to you, my listeners at Wall Street Oasis. If you have any suggestions whatsoever, please don't hesitate to send them my way. Patrick at Wall Street Oasis dot com. And till next time.

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