The transcript from this week’s, MiB: David Layton, CEO of Partners Group, is below.
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BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, another extra special guest from the world of private markets, the Partners Group is probably the largest private equity firm you’ve never heard of, perhaps because they were originally headquartered in Zug, Switzerland. They’re the largest listed buyout firm in Europe. They also have headquarters here in the U.S., in Colorado. They are decidedly not your typical private equity firm, not your typical Wall Street firm. They have a very thoughtful approach and a very long-term approach to making investments in the private markets.
I found David Layton, CEO of the firm, to be very thoughtful and very much different in how he thinks about risk-reward liquidity, various market sectors, processes, just the whole gestalt of we are a steward of capital with our clients, and we are aligned with those clients. It was really a fascinating conversation. I think you’ll enjoy it. With no further ado, the CEO of Partners Group, David Layton.
I’m Barry Ritholtz. You’re listening to Masters of Business on Bloomberg Radio.
My extra special guest this week is David Layton. He is the chief executive officer of the Partners Group, which is Europe’s biggest listed private equity and buyout firm, with a market cap of about $25 billion. They run over $135 billion in assets. David is on the global investment committee. He leads the executive team. Previously he headed the firm’s private equity business. He has been with the firm his entire career. David Layton, welcome to Bloomberg.
DAVID LAYTON, CHIEF EXECUTIVE OFFICER, PARTNERS GROUP: It’s a pleasure to be here.
RITHOLTZ: So let’s talk a little bit about that. That’s kind of unusual these days, you went straight to the Partners Group after you got a Bachelor’s in Finance from Brigham Young University and the Marriott School of Management, and you’ve stayed there your entire career. It seems kind of rare these days. Tell us about that.
LAYTON: Yeah. So I found Partners Group out of school. I was actually running the Investment Banking Club at BYU, and you know, thought I was interested in that, interested in going to Wall Street. I was tentatively committed to go to Lehman Brothers. And one of the Partners Group founders was on campus, and I went to convince him why he should come and be a part of what was called the investment banking boot camp that we were doing at the time to get students ready to go to Wall Street and do their interviews, et cetera. And I went to pitch this asset management guy on why he should come be a part of that process.
RITHOLTZ: Uh-oh, he jujitsued you, right?
LAYTON: And he jujitsued me and we ended up talking. And he was just this fascinating, bigger than life personality, and we ended up hitting it off and I got linked up with Partners Group directly out of school. Yeah.
RITHOLTZ: That’s really intriguing. You joined as an analyst? That’s where you began?
LAYTON: I joined as an analyst. I got an offer to Partners Groups New York office, and that’s where I thought I was going. And I got a call, not that long before I was supposed to start, by one of the partners there who said, wait a second, Dave, you’re not going to New York. He said, you’re coming to Switzerland, you know, for like a year, maybe three years until I tell you you’re ready to go to New York.
LAYTON: He said, how can you go join us in that market —
LAYTON: — before you know anything about us, right? How can you represent us in that market before you know anything about us?
RITHOLTZ: That must be an exciting call, right?
LAYTON: So I hung up the phone and had an interesting conversation with my wife about going to Switzerland, but that was the firm’s philosophy at that time. Switzerland was the center of gravity. That’s where the cultural ethos was kind of formed and —
RITHOLTZ: Zug, you went to Zug, Switzerland?
LAYTON: Yeah, Zug, Switzerland.
LAYTON: And in that environment, you know, through proximity to the firm’s founders, people kind of get culturally integrated and then we went to different offices from there.
RITHOLTZ: Do you speak Swiss or German or French?
LAYTON: I took some German lessons before I went there, and then I found out that Swiss German is a little different and I didn’t end up —
RITHOLTZ: Very different, isn’t it?
LAYTON: It’s a little different.
LAYTON: It’s a little different.
RITHOLTZ: But everybody there speaks English?
LAYTON: Everybody there speaks English. I was in an English-speaking environment for sunup to sundown.
LAYTON: It was very dynamic. My wife actually picked up more German than I did because she was out in the community.
LAYTON: But in our context —
RITHOLTZ: She had no choice.
LAYTON: — we had an English-speaking environment in the office.
RITHOLTZ: So how does one get from analyst in Zug, Switzerland to CEO in Colorado?
LAYTON: Yeah. So when I started, after a couple of days, my wife asked me, how do you like your boss? And I told her, look, I don’t know how to answer that question. I have 12 people —
LAYTON: — that tell me what to do.
LAYTON: I think it was the youngest person that they’d ever hired —
LAYTON: — up until that point. And so, I was just kind of sweeping up and doing whatever needed to be done. And it was so much fun working with different people in different groups, and I got a lot of good experience doing that. You know, when the firm launched its debt business, I was the analyst putting together some of the credit analysis on the first couple of loans that we had written at that time. We had a group that was doing small growth capital investments in Germany and Switzerland at that time, a fund doing secondaries. And the senior people were more specialized. But as young people, we’re just getting a very dynamic set of experiences and it was a lot of fun. And —
RITHOLTZ: It sounds like a baptism by fire. You’re just thrown right into the thick of it.
LAYTON: It was a baptism by fire in a very entrepreneurial culture, and that very much aligned with who I was and what I was interested in. You gain a lot of experience fast. And so from there, I went to New York, helped to build up the firm’s business in the Americas. We were really transitioning from, back then, outsourcing a lot of the investment content that we had done with other managers, to bring a lot of that in-house. And I helped to drive a lot of that in the Americas early on.
And then in 2016, we were thinking a little bit more strategically about our business in the Americas, and I championed this project to open up a headquarters for the firm in Colorado and —
RITHOLTZ: Away from Wall Street.
LAYTON: Intentionally away —
LAYTON: — from Wall Street. And that’s a part of the Partners Group secret of success, I do think. A lot of people ask us how we’ve been so successful in terms of innovating our business and evolving our business over time. And I think being in Zug early on helped with that. I was talking to one of our founders, he said, look, a lot of people think we’re in Zug for tax reasons. He said, we’re here because this is where my mother lived. This is where I wanted to spend my time and live my life.
RITHOLTZ: And isn’t that how private equity locates its headquarters? It’s, like, where’s mom? Great. Set up a shop over there.
RITHOLTZ: And are there that much tax advantages to be in Switzerland if you’re operating throughout Europe? I mean, it’s not like Monaco or Liechtenstein.
LAYTON: No, it’s not like that. But it actually had nothing to do, I don’t think, with the origins.
LAYTON: It was all about this is where he wanted to live his life and his founders agreed. And what that meant is that everybody that joined Partners Group at that time, wasn’t just a butt in a seat in a capital market changing jobs. They were moving their family somewhere and becoming —
RITHOLTZ: That’s a commitment.
LAYTON: — a part of something.
LAYTON: And that has created this very tight culture. within our organization. We said, let’s do the same thing in the Americas. Let’s find a place where our people genuinely want to live their life and raise their babies, and make that the center of our system. We decided to do that in Colorado.
RITHOLTZ: So that’s interesting because Colorado obviously in the Rockies.
RITHOLTZ: Zug, how far are you from the big ski resorts? That’s a lakeside town. Some of the photos I saw of —
LAYTON: In Zug, yup.
RITHOLTZ: — look quite charming. What was life like in Zug, and any coincidence that Colorado is about as close as you’re going to get to Switzerland and the U.S.
LAYTON: No. You’re in close proximity to the mountains there. It is an ideal setting there in the —
LAYTON: — yeah, in the postcard setting there in Zug, very charming. But you’re on your own a little bit as it relates to your ability to plug into the broader financial community, right?
LAYTON: So every client that we have, every asset that we own is a result of somebody getting on an airplane and —
LAYTON: — building a relationship. It’s created a culture being there, where we don’t expect anything to come to us. We are an outbound-driven firm, right? We’re a firm that identifies opportunity, and we hustle and get in front of it. And so, yes, beautiful setting there in the Alps. Yes, that did inform our choice with regards to location. Being in the mountains was important to us. We wanted to have that continuity of culture, if that makes sense.
RITHOLTZ: And how does the business split between Switzerland and U.S.? Are they the same types of business, just different geographies? What is the division from Colorado to Zug?
LAYTON: Yeah. We are a global firm. Our teams, many of our teams are organized on a global basis. We have most of our clients from Europe. That’s our biggest market. And most of our investment activity is in the Americas. About 55 percent of our investments that we’ve made are in the U.S. And that isn’t evolution, that it hasn’t always been the case. You know, a lot of people think of us as disproportionately European or Swiss. And they’re surprised to learn that over the last decade, we have invested most of our firm’s capital into the U.S. market. This is a big market, an important market for us.
RITHOLTZ: And when you look at the economy for the past decade, or at least as judged by the public markets, Europe seems to have been a little sleepy the past decade. The U.S. was where all the action was.
RITHOLTZ: Is that true in private markets as well as public markets?
LAYTON: Well, we have a global relative value approach to investing, which means that our firm will hold up an investment opportunity from the U.S., alongside opportunities from Europe, alongside opportunities from Asia, and we will fight about where we see the best relative value. And as indicated by the mix that I just described, we have found better relative value in the U.S. market. It’s not just about activity, but it’s about relative value.
Now, we have still been active in Europe. We’re actually bringing all of our investors to Vienna in just a couple of months, our biggest investors for an investor conference. And I want to bring them to the most European of cities, to send a reminder that even though there’s a lot of people that are down on Europe at the moment, that’s when a long-term investor and that’s where private markets, I think, can take a long-term perspective and continue to find opportunities when others aren’t looking.
RITHOLTZ: So I’m intrigued by the concept of relative value, looking at it globally by geography. How much is it the value of the company you’re investing in? How much is the prospective market size, as well as how robust local economy is? And by local, I mean, Asia, Europe or U.S.
LAYTON: Yeah. I would say that this has evolved over the last decades. So it used to be within private markets that you would find a good business, apply quite a bit of leverage to it, at least in the private equity business, and be able to make a pretty good return by buying good solid businesses as they are. That has changed.
Leverage levels have come down materially. You’re investing majority equity in most of the transactions that are occurring today. And it’s all about the future. It’s all about what are this company’s prospects? How are you going to steer this company to be able to maintain its market position? What can we do with this business over the coming years? So it’s much more about potential and how you can drive market-leading strategies than it is necessarily about just buying good business and leveraging it up.
RITHOLTZ: So we’re going to talk a little more about Partners Group in a bit, but I want to stay with the investments. You guys seem to be very long term. You’re not just buying something, putting a fresh coat of paint and then flipping it. You buy companies to run them and manage them for the long haul. Tell us a little bit about the giant portfolio of companies you guys are managing.
LAYTON: Yeah. So we manage a portfolio of several dozen companies. When you add together all of our portfolio companies, it’s effectively $100 billion enterprise —
LAYTON: — when you add all of our companies together across multiple sectors, and it’s global in terms of its breadth and scope. And —
RITHOLTZ: Quite a few employees also.
LAYTON: Yeah. So if you look at our business, we have about 1,800 people at the management company, and then across our portfolio, over 200,000 employees of our various portfolio companies. So we are a large owner of assets, and I think we take that stewardship very, very seriously. That’s one of the reasons why we really haven’t identified ourselves as a financial firm or as a money management firm. That’s not the proper lens through which to view Partners Group. I think we are very much an owner of assets. We’re a builder of businesses., and we’re a steward of these companies, and we take that very seriously. So I wouldn’t be surprised in the future, if you didn’t look at us. And we looked more like an industrial conglomerate than —
RITHOLTZ: That’s where I was going to go.
LAYTON: — like a private equity firm.
RITHOLTZ: That’s really interesting. You sit on the board of directors on a number of portfolio companies.
RITHOLTZ: Tell us a little bit about what that experience is like. You own them, but yet they manage themselves and you guys are involved in that. How does that operate? It sounds like there’s a lot of independence amongst all these different holdings.
LAYTON: If you think about the role that we play, as owners, it is a real responsibility that we have to develop these companies over time. The role of the board, years ago, maybe wasn’t that critical, or wasn’t that important. Today, it is absolutely paramount to your success as an investor. And so we are very, very focused on making our boards the center of vision and strategy and accountability.
Our board members work more intensively with our companies, have a greater time commitment than most board members are used to. This is not come together once a quarter, eat chicken dinner, and rubber stamp a couple of things.
LAYTON: But this is really roll up your sleeves and have a commitment to helping to chart the appropriate path moving forward. And I have always taken that stewardship very, very seriously. And the culture that we’re creating is to take those board assignments very seriously.
Yes, there is a lot of steering of individual strategy that goes on in the portfolio companies. At the same time, Partners Group is developing a business system that we are looking to apply across our portfolio companies. We’re looking to create a culture that is similar with regards to how we set strategy, with regards to how we create accountability on that strategy, with regards to how our boards get involved in driving that strategy. And that’s something that we think is essential to differentiation in the future.
RITHOLTZ: Really interesting. You’re headquartered in Colorado. How often do you get back to Switzerland?
LAYTON: I’m in Switzerland about a week a month.
RITHOLTZ: Oh, really? That much?
RITHOLTZ: Wow. That’s a lot of travel from Colorado.
LAYTON: That’s a lot of travel. Yeah. That goes with the territory.
RITHOLTZ: Quite interesting. So let’s talk a little bit about the firm. It has a market cap of over $25 billion. That’s bigger than Credit Suisse, which means you’re a pretty substantial entity. Tell us a little bit about the corporate culture which is decidedly different than the typical Wall Street bank.
LAYTON: Yeah. First, let me put into context, some of our views with regards to how our industry is evolving and that will help to inform some of the decisions that we’ve made with regards to how to set our company culture. The private market is not a young industry necessarily, have been around for 40 years. But the skills, the talents, the attributes that allow people to be successful in this industry, historically, are not necessarily the attributes that are going to be successful in propelling firms in the future.
If you think about the way private markets functioned 20 years ago, 25 years ago, people would, with a transactional skill set, provide access into an inefficient asset class, right? They would do that by buying and selling things, and they were able to make a good living doing that. And that this transactional skill set is something that was praised. You’ll hear teams call themselves deal teams. Individuals call themselves deal professionals. And this deal side of the business is really what was emphasized.
RITHOLTZ: Now that you bring that up, I have to ask a question. I kind of read a shocking thing. You guys banned the word deal from company.
RITHOLTZ: Explain that.
LAYTON: It fits in the context. It’s because the things that made people successful, that deal-doing mindset is not the things that are going to make us successful in the future.
RITHOLTZ: Meaning you overemphasis on transactional, drop a ticket, get the next trade then flip it as opposed to building something?
LAYTON: Exactly. Our business is no longer about doing deals and providing access. It’s about building businesses. And so, we don’t want to put too much emphasis on the transactional side of things. We think that’s been overdone, historically. We really want to emphasize the rolling up your sleeves, strategy setting, building businesses side of things. And because of that, we’ve asked our people to change their terminology. We’ve done things like change our job titles. We don’t have senior vice presidents, you know, 25-year-old senior vice presidents running around anymore.
RITHOLTZ: Right. That’s the entry level positions, senior vice president.
LAYTON: We’ve changed that. That’s, again, a reference to kind of Wall Street culture. That made sense maybe years ago when you had to sound important on the phone. But in today’s environment, we don’t think, you know, it makes a lot of sense. And so, the culture that we’re creating is a more industrial culture, focused on rolling up your sleeves and building businesses. And that’s reflective of, we think, the environment moving forward.
RITHOLTZ: So now I understand why your headquarters in Colorado has a sign on the wall that says, this is not Wall Street.
RITHOLTZ: So not only are you locating the firm 2,000 —
RITHOLTZ: — miles away from Wall Street. You are making a very conscious effort to behave very differently.
LAYTON: And by the way, Barry, when you walk through the door, it’s immediately apparent to you, because when you walk through that office in Colorado, it is brick, steel, stone. We have built a more industrial business building feel that is in direct contrast to what you see in most places within our industry.
RITHOLTZ: So where are you in Colorado?
LAYTON: So we’re just outside of Boulder, in a town called Broomfield.
RITHOLTZ: Really interesting.
RITHOLTZ: So you are nowhere near Vail, or some of the chichier parts of Colorado. Is that a fair statement?
LAYTON: Yeah. We’re down the mountain.
RITHOLTZ: Which is a good three hours.
LAYTON: Depending on the —
RITHOLTZ: The weather.
LAYTON: Depending on the weather and the traffic.
LAYTON: Yeah. It can be a bit. But let me tell you something, when we first decided to move to Colorado, you know, in a way, a part of this whole move away from Wall Street create an environment that’s somewhat similar to the Zug, you know, culture that we came from. We talked a little bit about being in Zug. Now, one of our founders grabbed me one time and said, hey, why don’t you figure out where you want to live your life and see if people want to move there also, right, and follow you and be a pioneer (ph) of that.
RITHOLTZ: Do you have any prior nexus with Colorado, or was this just, hey, big country, let’s go here?
LAYTON: It’s just a fantastic environment and the people that are there are so happy. It’s one of the highest quality of life, anywhere that you’ll find. And I think that makes a difference, right? When we first opened up, people are kind of scratching their heads, what are these guys doing? Today, we get more resumes into our Colorado office than our next six offices combined.
LAYTON: It really has set us apart, and it’s something that’s quite unique. And it’s also directly in line with what we’ve been talking about. It’s different from Wall Street. It creates an environment for us, where we can be independent thinkers, and that really worked.
RITHOLTZ: So let’s drill down into that a little bit. I was reading about the firm and its investment process, and it seems like you guys can spend as long as five years studying a company —
RITHOLTZ: — before you make an acquisition. Whereas in most of finance, it’s competitive, and sometimes you need to make a decision now or someone else is going to outbid you. How do you go about kicking the tires of a company for three or four or five years? That seems to be inordinately lengthy compared to the way traditional finance operates.
LAYTON: Yeah. When I came up in the industry, when a company would come up for sale, we would have four or five months to research that business, and to do due diligence, and to meet the management team, to build our models. And that’s enough time to get to know a space, and to get to know a sector, and to get to know a company and decide if you want to make an investment or not. With the competition that’s increased within our space, it’s more like four or five, six weeks that you need to make that decision, okay? And you just can’t do the type of work that you need to do —
LAYTON: — to write a large check in four or five, six weeks and to buy an entire company. And so, we have really put emphasis to our team on doing work well before a company sale process, to make sure that when that company comes up for sale, that we are expert on that space, we’re expert on that subsector. And that we’re doing confirmatory work, we’re not starting from scratch. That’s something that’s really emphasized within our culture. And you know, if you think about the current environment, right, rates have changed.
RITHOLTZ: For sure.
LAYTON: Leverage levels have changed. And that means there’s a couple hundred basis points of returns that’s come out of our industry if you’re just doing things the same way.
LAYTON: So you need to be investing in a different profile of business. You can’t just hope to lever up a good company and generate a return that way. Today, you have to find sectors that are transforming, right, businesses that we can transform through active ownership in order to generate the same type of returns that have happened. And we think that that’s going to be a critical part moving forward. So we put all of our emphasis today, from a sourcing and origination perspective, around thematic work. That’s a big topic.
RITHOLTZ: So we’re going to talk a little more about sectors later. Now, I have to ask, you mentioned the time horizon for evaluating companies and the competitions. Your size puts you in the same league as private equity firms like Blackstone and Aries. How often are you bumping into competition when you’re kicking the tires on a company for a couple of years, when those guys tend to write a check after eight weeks?
LAYTON: Yeah. I often look at the public markets, and then a little green with envy sometimes, to be honest. Because in the public markets, you find a sector that you like, and find a company that you like, you hit the buy button and you create that exposure for yourself, for your clients.’
In the private markets, you find a sector that you like, you do your research, you find a company that you like, you have to wait for years until an event comes up. And then there’s only one firm that’s allowed to create that exposure. Okay. And you have to go up against some of the most aggressive, smart individuals that you will ever come across in your life, and you have to differentiate yourself.
And Partners Group, I think, had done a good job of winning more than its fair share of transactions in the market by being a differentiated kind of firm, a differentiated kind of owner, one that’s a true partner to industry, a partner for growth, and that’s helped to distinguish us against some pretty stiff competition.
RITHOLTZ: Not a coincidence that you’re named Partners Group, that didn’t happen by accident.
LAYTON: No, not by accident at all.
RITHOLTZ: So let’s talk a little bit about some of your closed-end funds. Typically, most private equity or buyout funds tend to be a quarter million dollars or more. You have a fund that requires a minimum investment of only $50,000. Tell us the thinking behind making access to this sort of investing easier for people who might not have a quarter million dollars lying around.
LAYTON: Yup. So if you’re an institution investing $100 billion today, or $50 billion, or $10 billion, private markets is already a big part of your portfolio. But for individuals, historically, there have not been great options to invest into private companies. It’s been one of the best performing asset classes for decades. And there’s a real democratization of access to private markets, and we’re one of the firm’s that’s been leading that.
Look, our parents all had pension funds. Our kids are all going to have 401(k)s. And so the —
LAYTON: — sources of funds for our industry is going to change as a result of that. It’s been primarily pension, historically. It’s been a lot of insurance and that sort of thing. And the future is private individuals and we think defined contribution programs [target date funds]. And we’re a firm that is really cutting edge and leading with regards to providing the types of solutions that those type of clients are looking for.
RITHOLTZ: So when you’re offering a fund to a smaller investor, a $50,000 investor, how does the ownership within what those folks invest in? How does that compare to what Partners Group, at large, investing?
RITHOLTZ: Is it a particular strategy, or a multi-strat approach? How do you think about that?
LAYTON: Yeah. So our clients get access to all of our investment content that that particular fund is targeting. We have been really focused, as a firm, on not creating silos, not having one team that just works for this particular financial product, and this team that works for this financial product. But all of our investment professionals work for all of our clients collectively, and that gives us the ability to create a vehicle, for example, for an individual client, a bespoke solution for an individual client, or a structure for a group of like investors like, you know, private clients, and have them participate in the exact same investment content that our other large investors get access to.
And so that vehicle, you don’t have to worry about having the A Team on the big institutional money and the B Team on the retail money —
LAYTON: — which is something that some people do worry about. Our investors get equal access to the opportunities that our global teams pursue.
RITHOLTZ: So in other words, I’m not liquid for a billion dollars. I don’t remember where I left that. So even if I don’t have a billion, I could still participate similarly to an endowment that does have a billion dollars?
LAYTON: Yup. And I think that’s the future. You know, limited partnerships that have been the traditional structure that our industry have used, these are archaic structures, right? They were innovated in the 1970s and ‘80s as a tool for individual wealth creation. And they have been jerry-rigged effectively to now made its $10 trillion of assets, which is pretty incredible.
RITHOLTZ: That’s a lot of money.
LAYTON: They are not the future, right. The future is we think vehicles that have some structure to them, that allows for easier access.
RITHOLTZ: So when you talk about $10 trillion, you have discussed, you think this is going to end up being a $30 trillion marketplace.
RITHOLTZ: So if there’s $10 trillion and you believe it’s structured in a way that won’t work for the average investor, where’s the next $20 trillion going to come from? Is it going to be institutional? Is it going to be individuals? Some combination? Where do you see the growth here?
LAYTON: Yeah. It’s going to be some combination. But individual investors and defined contribution coming online more fully is certainly an element of that. You know, our industry has been growing for a long period of time. It has grown across different rate environments. And we’re big believers that it will continue to grow, and that this is going to be an industry that continues to benefit from some of the tailwinds that do exist.
RITHOLTZ: So I’m surprised to learn you guys acquired Breitling, the big watch company. Tell us a little bit about the thinking behind that acquisition.
LAYTON: Yeah. Breitling, I think, is one of the coolest Swiss watch companies ever, with its aviation heritage, and the partnerships that it’s done in the automotive space, in diving, in space. It’s got such an incredible heritage, and we’re really happy to be a part of it.
RITHOLTZ: I saw a pistachio dial chronograph that they put out, that was just unique and gorgeous.
RITHOLTZ: Really, that’s special.
LAYTON: No. I mean, the innovation at that company today is really, really incredible. And you know, there’s a lot of people who kind of say, what are you doing investing into a consumer business?
RITHOLTZ: Right. It’s crazy competitive one too.
LAYTON: In an environment like this, that’s a business, you know, growing at 25 percent last year. It’s got enormous potential in the Asian and U.S. markets, where it’s growing really, really strong. And you know, people think of it as a very masculine company, but its female segment has a tremendous amount of potential. And with some of the innovation that they’re driving, with some of those colors, et cetera, that you’re talking about, a lot of potential.
RITHOLTZ: It’s a fashion accessory, not a timepiece.
LAYTON: A lot of potential. Oh, it’s a timepiece. I mean, the mechanics are —
RITHOLTZ: For sure.
LAYTON: — fantastic. But it’s a fashion accessory as well.
RITHOLTZ: Right. It’s a piece of jewelry.
RITHOLTZ: It’s a fashion accessory. It’s more than just telling time is perhaps a better way to describe it.
LAYTON: Yeah. And so we’re really excited about that investment and that partnership.
RITHOLTZ: Quite interesting. There are some quotes of yours that I really like and I have to ask you about, starting with there is a Darwinian struggle ahead for private markets. Tell us why you believe that is the case.
LAYTON: The world has changed, right? We are in a new rate environment. And many of the tailwinds that have allowed many firms to be successful and generate strong returns have turned into headwinds. And we had a long period of cheap capital and high amounts of —
RITHOLTZ: Free cap.
LAYTON: — free capital, essentially, and large amounts of leverage being available. That was a tailwind. We had a long period of globalization, right, where we could take costs out of our portfolio companies, take them out into a global marketplace and improve margins, strong macro growth environment. And many of those factors have changed, and some of them have even turned into headwinds. And so as a result of that, the formula for success that I think many of these more transactionally-oriented firms are pursuing, we think is going to be challenged.
And as a result of that, this environment that we’re in is going to initiate a period of natural selection, whereby the strong firms will get stronger, and the weak firms will struggle and struggle to raise new capital. And this isn’t dissimilar from what’s happened in prior eras within the financial services sector. I mean, if you think about the public markets in the ‘80s, right, you had stockbrokers that were driving Ferraris, right? And the value system was built around transactions and transactional skill sets then as well, right?
It was an inefficient market. People would get their newspapers and read their ticker. They would talk to their broker with no idea of where the market actually was —
LAYTON: — at that moment. And the whole incentive system for the industry, the public markets at that time was around how much transaction volume can you generate in an inefficient market? Think about 10 years later, right? It wasn’t about individuals generating transaction volume, it’s about which institutions can build something that’s truly differentiated, a platform with a different way to engage with clients and have a differentiated client engagement model.
And we think that, you know, the private markets may very well follow a similar path. And the values of our industry need to shift from individuals generating transactions, and that being where the emphasis is, towards platforms that are building something truly differentiated.
RITHOLTZ: So there’s another quote of yours which I suspect could be related to the Darwinian struggle, which is, it’s never been more expensive to be naive. Explain that because that’s quite a loaded sentence. Whether we’re talking about investors or various firms, it’s always expensive to be naive. And you’re saying, it’s as bad as it ever gets right here.
LAYTON: Well, you know, the generalist investor model, where you look for interesting businesses and you know, invest in them out of a generalist perspective is tough. It’s going to be tough, we think, for a long time. If you think about what is going to differentiate firms in the future, we think it’s going to be having a real perspective on the way an industry is going to move and how it’s going to evolve. There’s so much digital transformation occurring, so much disruption occurring, that if you invest into a space, not being a specialist in that area, we think it’s really tough.
Our firm is putting a tremendous amount of emphasis on thematic research. We want our people to be deep, as we talked about before, spend a couple of years on a space before ultimately investing into that space, to make sure that they understand how that market is going to evolve, who the winners likely are going to be. And we’re putting our emphasis not on what’s the size of the business today. But we put our emphasis around which company is likely to be a market leader four or five, six years from now in that particular space. And that takes work, that takes research.
RITHOLTZ: So you’re looking at five years. That means that sectors that are doing well today, you may have been thinking about five years ago pre pandemic. Tell us what sectors today seem to be coming into their own and what other sectors are beginning to look intriguing.
LAYTON: Yeah. And the COVID environment has actually accelerated some of those themes that we were thinking about and have been thinking about for a long time. So the digital payment space, for example, that’s not a new topic, right? There’s been a transition to digital payment for a long period of time, but COVID helped to accelerate that. And so, we invested into one of Europe’s largest electronic toll collection companies. Here in New York, you have E-ZPass.
LAYTON: And in other markets, there’s SunPass and other things like that. We invested into Europe’s largest electronic toll collection company, and that’s an example of a trend that we were watching for a long time. And then COVID helped to really accelerate that.
RITHOLTZ: I like the way —
LAYTON: And people really stopped using cash, let me tell you, during that period of time.
RITHOLTZ: I like the way you phrased it because a lot of the things that have become very large, existed long before COVID, but they were kind of on the fringe. I just signed a whole bunch of bank docs through DocuSign on my laptop. That’s been around forever, but it’s ubiquitous.
LAYTON: Yeah, absolutely.
RITHOLTZ: Like, wait, you want me to FedEx your documents to get a wet signature on it, and then have the other eight people sign it. That sort of stuff is —
LAYTON: It feels archaic. But just three years ago, we were doing that. Yeah.
RITHOLTZ: Right. When I launched my firm, me and my partners, we were national. So we were always in the cloud and we were always virtual. I found the pandemic kind of amusing where lots of people discovered video chat and screen sharing. All this technology is a decade old. How do you get ahead of a curve when suddenly you have a two-year just rush into that space? How do you separate the winners from the also-rans?
LAYTON: Yeah. It’s through a lot of work. It’s through a lot of research, and it’s by having people that specialize in that particular area. It’s about surrounding yourself with not generalist consultants that come in and tell you this market is big and growing, right?
We want our teams to engage with organizations that are specialized, or better yet, individuals that had been running companies in those spaces and that have been there and done that, and know where the bodies are buried. Those are the people that we want to align with, as we’re going into due diligence. We want to, you know, work with them and have them join the boards of our companies. And so it comes by surrounding yourself with the right people and the right kind of people as you go into researching these type of businesses.
RITHOLTZ: So you mentioned earlier the marketplace is changing, what was tailwinds very often today are headwinds, which raises the important question, how important are private markets to the economy relative to public markets? In fact, you had suggested public markets decoupled from the real economy. And now, it’s all about what’s private.
LAYTON: Well, I wouldn’t say it’s all about what’s private. But there has clearly been an evolution that a lot of people haven’t been fully conscious of. It’s been a shift in roles, really, that the public markets are playing and the private markets are playing. It used to be the private market were where you went to bet, speculative investments. This is where you went to get your risky venture capital exposure, or your highly leveraged equity exposure. It was called an alternative asset class. Because, you know, you were meant to allocate maybe just small, little sliver, and the public markets is where you go to invest into bedrock companies that anchor the economy, household names, et cetera. That has changed.
If you look at the companies that have been going public, the capital formation that’s been occurring within the public markets, a lot of people are shocked when they dig into it and they learned that only 20 percent of the companies that have been going public more recently have an earnings history. Okay. The vast majority are technology companies selling the dream, or they’re shell companies without financial substance. Those are the companies going public. There’s a lot more speculation happening in the public markets these days.
Meanwhile, the private markets have been increasingly relevant to owning the real economy. If you think about the food value chain, for example, what are the types of companies that are going public in the food value chain? You have the ones that have a big brand and a network effect, right, like a Grubhub or something along those lines like that, that is in the public eye, and draws the interest of public investors.
Meanwhile, if you think about the rest of the food value chain, the agricultural businesses, the fertilizer companies and crop protection companies that are out there, the logistics companies that are out there, a lot of them are not appealing to public markets —
LAYTON: — investors because they don’t have the sizzle, right?
RITHOLTZ: Right. So they’re not marketing to the end consumer, so the average person knows less about them.
LAYTON: They don’t know about them. So, interestingly, a lot of those businesses are now owned by private markets firms, $10 trillion of assets that are anchoring the economy. And so there’s been this shift in roles, where the private markets used to be very speculative. And now, that’s where you go to get exposure to the real economy. And the private markets used to be, you know, bedrock companies that anchor the economy. And now, it’s a technology index effectively for many investors.
And I think that isn’t well known by a lot of investors. And it’s one of the things that driving interest in our space by investors that haven’t traditionally had access. That’s one of the reasons why private investors, for example, are increasingly interested in private markets, is because that’s the only place that you can go to access certain sectors.
RITHOLTZ: So that raises a couple of really fascinating questions. The first is, given that private markets were previously speculative, and now you’re suggesting public markets are, the first question is what does that mean in terms of how we value each of those two types of investments? And then the related question is, how dependent are private markets on public market valuations?
LAYTON: I think they’re very closely linked in many regards. There are some differences. The public markets did experience a lot more hype in certain periods of time. And so, a lot of people look at the private markets and say, shouldn’t there be a correction in the private markets that is on par with what we’re seeing, you know, in the public markets? And so, let me just create a little bit of context for —
LAYTON: — some of the differences in valuation that have been out there. Between, you know, the 2018 time period and 2021, the public markets experienced multiple expansion on an EV to EBITDA basis of about 11, 12 times, historically. I think it went up to 18 times at the peak, and it’s come down to 13 or 14 times or whatever it is more recently, a pretty substantial kind of pullback.
Over that same period of time, the private markets, your average private markets company increased in value from about 11 times to about 12 times. Okay. And so you’re not, you know —
RITHOLTZ: Pretty steady evaluation.
LAYTON: Not in every space, not in every sector, and not for every type of company. You do see some big valuations there. But on average, as an industry, our average company didn’t participate in the hype necessarily fully that the private markets experienced. And so, it shouldn’t surprise people that your average private markets company doesn’t correct in value at the same level.
In addition to that, the private markets have, historically, been pretty good at driving assets, aligning interests with management teams, having a pretty compelling business case that they’re driving. And so, for example, our average portfolio company has had double-digit growth over the past year, and that helps to offset some of the downward pressure that, you know, the markets bring.
RITHOLTZ: So I want to get to the issue of alignment in a moment, but I have to follow up on what you just hinted at, which is, why are the private markets so steady compared to the ups and downs, the multiple expansion and contraction that we see in public markets? And I know there may not be any definitive answer. What’s your theory here?
LAYTON: Well, you have a market that’s driven by decisions by sophisticated investors to invest or to divest. Okay. You don’t have a lot of fear-based selling —
LAYTON: — going on within the private markets.
RITHOLTZ: An advantage of not getting up prints every tick, every minute, constantly to —
RITHOLTZ: — freak people out.
LAYTON: And I think that is a big part of it. We’re always going to be an asset class that puts emphasis on long-term performance over short-term liquidity. It just is what it is. So we don’t feel pressure to sell things at all when the markets start to bounce around.
RITHOLTZ: And if anything, there’s illiquidity impediments to making those sorts of decisions. The old line is you don’t get a price on your house every minute of every day. If you did, you might get panicked out of it. You don’t even have that option of panic selling if you want in the vast majority of your holdings, I’m going to assume.
LAYTON: Yeah. Panic selling is rarely a thing within private markets, and it is sometimes a thing in the public markets. And that’s a big difference with regards to how people think about their holdings between the two asset classes.
RITHOLTZ: That’s really very intriguing. So let’s talk a little bit about alignment. You have said we are fully aligned with our clients. And I think of you as having two sets of clients. One set are the outside investors who give you their capital to invest. The other set of clients are the companies you acquire and are partners with. How do you align your interest with these two diverse sets of clients?
LAYTON: I think the private markets is a fantastic asset class from an alignment of interest perspective. We win when our clients win. And that comes from having our capital invested alongside theirs, and having very strict requirements for performance before we get paid performance fees. And I think that alignment of interest is something that is really, really strong. In turn, we then create the same types of relationships with our management teams. So it goes all the way down the chain with regards to alignment of interest.
RITHOLTZ: Meaning the portfolio companies, their interests are going to be determined by their performance as well.
RITHOLTZ: So from the investor to Partners Group, to the portfolio companies, everybody is aiming in the same place and everybody gets paid —
RITHOLTZ: — when the results work for everybody’s benefit.
LAYTON: And we’re a very client-centric firm. You know, we talked a little bit about our Colorado campus and how we’ve created a field. It’s a little bit more like a factory feel. You know, when I was a kid, my dad ran a manufacturing facility, and I remember being with him on the floor, you know, at the manager’s window or whatever, and him walked around that floor. And I had in my mind, you know, the feeling like there’s no question in my mind who these people work for. Like, he walked that floor and he really, you know, drove it. And I always loved that visual of the manager’s window, you know, in a factory.
And so on our floor, we have client conference rooms that look out over our employees, that represent a manager’s window. And so the message to our team, the message to our people, it is the people in that room that you work for. Those are the people that you report to. Those are the people that you owe something to. And we’ve really tried to create that sense of client centricity and alignment with our clients, not just in our documentation and with our incentives, but also, culturally, within the fabric of our firm.
RITHOLTZ: Quite interesting. So let’s talk a little bit about this reallocation from public markets to private markets that you think is going to lead to the private market sector tripling over the next, let’s call, a decade, am I being —
LAYTON: Yup, that’s about right.
RITHOLTZ: — too conservative, or is that about right?
LAYTON: Yeah. We’ll see how the environment plays into it. But, directionally, we think that that’s correct.
RITHOLTZ: So where is this going to come from? How much of this is going to be individual? How much of this is going to be institutional? And are we going to see 401(k)s offer the opportunity to make the sort of private equity investment?
LAYTON: Yeah. You know, I came from an interesting client meeting this week, Fortune 100 company that is in the process of reclassifying some of their investment buckets. And they’re actually going to take their long-term bond portfolio and blend it together with their private credit portfolio because they think that private credit offers better risk-return in the current market environment, and not less risky, et cetera. So they’re thinking about opening up access to private credit out of this portfolio.
So institutional investors are thinking about how, I think, they can use private markets more effectively within their portfolio. And individual investors, we think, in many instances, can benefit to having access to a strong performing asset class like the private markets. Now, it’s certainly not for everyone, right? The amount of allocation that people put into private markets certainly depends on people’s risk tolerance. This is an illiquid asset class.
LAYTON: We can do things, as an industry, to make it more convenient and to create some degree of liquidity in good times. But this is always going to be an asset class, again, that prioritizes long-term performance over near-term liquidity. And so, it depends on the investors desire to do that. But by and large, the investors that we talked to are looking to increase their allocations to private markets because it is such an important part of their allocation.
RITHOLTZ: So let’s talk about private credit for a minute. Back when interest rates were at zero and the 10-year yield did practically nothing, we saw a lot of institutional interest in private credit. Hey, listen, we’re getting some yield. There’s an illiquidity concern. But we know what our future liabilities are, and we can ladder that out. So it wasn’t a challenge —
RITHOLTZ: — for a big institution. So the first question is now that rates have come up quite a bit, Fed is just coming up on 5 percent, is there still the same demand for that sort of private credit when there is an alternative, you’re no longer competing with, you know, a one and a half percent 10-year? How does that play in?
LAYTON: I think the private credit industry has really come into its own since this rate hike cycle began.
LAYTON: And demand for absolutely private credit has increased disproportionate to a lot of other asset types that are more dependent. And so, if you think about like the equity side, for example, I was sitting down with a client recently and trying to illustrate the impact that this changing rate environment would have. And I pulled out an old model for an investment that they liked in particular, and it was a 21 percent return that had been underwritten. And here’s the assumptions that we had with regards to leverage levels, with regards to rate, et cetera. And I punched in the new environment, I just said, okay, that 6.7 times leverage, you’re not going to get that anymore.
LAYTON: That’s going to be more like 4, four and a quarter, right?
LAYTON: You changed that. And there was 250 basis points in return gone because of that element. Okay. This cost of capital is no longer applicable. It’s more like double that today.
LAYTON: And that brought it down by another 150 basis points or whatever. And then we took a look at, okay, now, you know, within private credit, you can lend at 4, 4.25 times, EBITDA and gets, in some cases, a double digit return doing that if you’re kind of structuring solutions for the right type of clients. And then you have to wonder, you know, on the equity side, you really have to work, right —
LAYTON: — to generate that outperformance. And so on a relative value basis, there’s a lot of investors that are finding private credit as a particularly attractive place to invest right now. We have a lot of very interesting dialogue with our clients about that.
RITHOLTZ: Especially considering the past decade, not counting 2022, but the decade prior to that, you saw 13, 14 percent a year in U.S. equities —
RITHOLTZ: — which is way over —
RITHOLTZ: — historical 8 percent a year. Wouldn’t surprise if, you know, 5, 6 percent a year, 6, 7 percent a year, you’re mean reverting especially in the face of higher rates and cost of capital, wouldn’t it be outrageous to make those assumptions?
LAYTON: It wouldn’t be outrageous. And what that means is you really have to pick your spots. It used to be, you know, that you could invest into a good grower and just assume the economy would take care of some portion of the value creation strategy. Today, you have to be buying companies that are growing really disproportionately strong in order to go long equity.
And so, the average company that we invested to, the equity side was growing its earnings by double digits. And those are the type of businesses that you can continue to generate strong returns on, but it requires that thematic research to make sure you’re getting your spots really well. It also requires an ownership model that’s quite intense to drive transformation. And on the credit side, there’s a real opportunity today to invest at attractive returns. I see that in the investment committee every week.
RITHOLTZ: Really interesting. One of the things we haven’t talked about, if you’re appealing more to individual investors, typically, that comes along with regulation and compliance standards and oversight from the government —
RITHOLTZ: — something that the world of private markets really doesn’t spend a lot of time with. The assumption is, hey, these are big, sophisticated investors, making big investments into companies. And everybody here is an adult, and so we don’t need a paternalistic oversight. Once you bring in smaller, I’m not even saying mom and pop, but accredited investors or non-institutional investors, there’s a different level of scrutiny that comes with that. How are private markets and private equity going to manage that sort of regulation?
LAYTON: Yeah. So the industry, as its expanded from a small niche industry years ago to an industry today, already managing $10 trillion of assets, already a fiduciary for the funds of hard working capital, a regulation has already increased substantially, compliance needs have increased substantially within our industry. And I have no doubt that that trend will continue.
We continue to appeal, I think, to particularly sophisticated investors, and that has to continue to be the case. This is not an asset class that I think like retail investors are going to allocate to. Even that fund that you mentioned previously, where it’s, you know, a minimum of $50,000, or whatever it is, I think our average investor there is $200,000. So it’s a sophisticated investor that’s allocating.
RITHOLTZ: It’s not a Robinhood investment.
LAYTON: It’s not, absolutely not. And if you think about 401(k) plans, for example, the place that our asset class is going to be most relevant for the near term is in the defined contribution portions of that 401(k) market, where you still have a sophisticated portfolio manager that’s putting those portfolios together. I don’t think that anybody in the near term expects within their 401(k) allocation to be able to go in there and bounce to a big private equity fund. That’s not going to be the case. But, you know, we are going to attract demand from increasingly individual set of investors, and that’s going to come with regulation. And the big firms will be able to deal with that.
RITHOLTZ: So I have to ask one question related to the interest rate environment. You mentioned the Darwinian struggle, the changing environment, how zero cap cost to capital was a tailwind before. Now, rising rates are a headwind. You’ve talked a bit in public about the Federal Reserve, suggesting, you think, they’re going to overshoot on the rate hikes. you have a unique perspective to observe this through your 100-plus portfolio companies. Tell us why you think the Fed is going to end up going too far and overtightening?
LAYTON: Well, I think it’s possible. The Fed had a choice of either taking a big ratchet all at once, shocking the market and changing behavior, or doing it slowly and incrementally. I mean, it was a fast rate hike, obviously. But —
RITHOLTZ: Right. 75 basis points. The first one, anyone was a little shocked.
LAYTON: Yeah. The first on is 75. But really doing something shocking to change behavior of consumers, of people that are out participating in the market, or making these incremental changes that are more or less in line with consensus on what the Fed should be doing. And they’ve chosen to go in a more or less consensus-driven pattern for most of the changes. And so what that means is opposed to shocking the market and changing behavior through setting a tone up front, they need to wait for the impacts of those rate hikes to flow through. And that just takes some time.
LAYTON: So I have no doubt that it will take some time for the full impact of many of these hikes to be felt and to fully change behavior. And therefore, there could be the potential of oversteering or overshooting as a result of that.
RITHOLTZ: Curveball question, you guys are very much the anti-Wall Street both in location and by design. You almost ended up at Lehman Brothers. You know, did you dodged a bullet there? What would happen if you ended up going into Wall Street proper, given your current philosophy?
LAYTON: I absolutely dodged a bullet there. And I’m grateful every day, actually, that I landed in a place, in a culture that is thoughtful, that is thinking towards the future, that’s a little bit more humble and able to navigate an environment as opposed to getting lost in ego. I absolutely am grateful every day that I dodged a bullet there, no question, Barry.
RITHOLTZ: Great answer. I know I only have you for so much time, so let me jump to my favorite questions that we ask all of our guests, starting with, what do you do for entertainment out in Colorado? What have you been streaming and watching over the past couple of years? Tell us what’s kept you and the family entertained.
LAYTON: So my wife owns the remote at home. And so, if we’re streaming something, it’s usually something about British baking or Indian dating, or something along those lines. I really love this Mandalorian series and can getting into that.
RITHOLTZ: I think Season 3 comes out later this year.
LAYTON: Yeah. Yeah, looking forward to that.
RITHOLTZ: That’s intriguing. Tell us about some of your mentors who helped to shape your career.
LAYTON: Well, I think my parents had a big influence. My dad was a business person and had a tremendous work ethic. My mother’s unbelievably loyal person and helped to inspire that in me. I’ve got a couple of partners, in particular one, Walter Keller, he has just an elephant memory, right. Every way that we’ve screwed up as a firm, he’s got it in his head and he brings it up, and he keeps us out of trouble, to the point where actually close to my office, in the campus, for everybody to see, everybody on the floor, I have all of the lessons learned of the firm, every way that we’ve lost money. And that’s largely a download out of Walter’s head for the rest of our colleagues to kind of understand the lessons that we’ve had over time. And he’s been a great mentor. And our three founders have all been, in their own way, real mentors to me as well.
RITHOLTZ: Tell us about some of your favorite books and what you’re reading right now.
LAYTON: So I just finished Bono’s memoir Surrender. I usually read something a little bit more light and a little bit more serious. There’s also a book called The WEIRDest People in the World. That was a really interesting read.
RITHOLTZ: I recall hearing about that.
LAYTON: Yeah. It’s interesting. I’ve got a couple in the chamber, one my wife gave me, it’s called This Is Your Mind on Plants, and then one called Chip War by Peter Miller that I’m looking forward to getting into.
RITHOLTZ: What sort of advice would you give to a recent college grad interested in a career in either investing or private markets?
LAYTON: Yeah. So I do spend quite a bit of time with our hires or new hires, and I think we’re going to hire 55 kids out of school this year —
LAYTON: — directly into our analyst program, where they rotate across our different things. And I always set the tone, first day of training, when they come in, and one of the things that I tell them is that this is no longer a young asset class, right? This is an asset class that’s been around for a little while, and it might have been the fast money lure of doing deals and kind of transactions that got you interested into this space. This is an asset class that you can have a tremendous impact as an owner, but you’ve got to be prepared to roll up your sleeves and work.
So we’re sending many of our young professionals to work in our portfolio, right, to get experience how to run projects, and how to run businesses, and send them to work for our CEOs as much as they spend time working, you know, within our halls. And I think that’s something that young professionals need to be aware of, that the needs of young talent are changing, get some operating experience.
RITHOLTZ: And our final question, what do you know about the world of private equity investing, buyouts, private markets today that you wish you knew 20-plus years or so ago when you were first getting started?
LAYTON: I would say that investing is a team sport. I always maybe thought about it growing, it was more of an individual pursuit. You know, I had a client recently who pulled out my track record. They were in a due diligence session, and said, Dave, this a fantastic track record. What’s the secret of your success? And I thought that’s an ego-affirming question.
LAYTON: Right? You like to hear that, to some degree, get a little tingle up your spine. I thought about how to answer it, and what I told her was, what you don’t see on that list is Company A, Company B, Company C, D, E, those are all companies that I had under exclusivity at some point during my career. But my partners, people that used to be my bosses that are today my partners, wouldn’t let me invest. And I’m telling you, if you average together those investments that I didn’t make, together with the investments that we did make, I would have a much more average track record.
Those investments were done by other firms, I’ve gone back and looked at it, they were not as successful as the ones that did happen. And so surrounding yourself with partners that are going to challenge you, and push you, uncover your blind spots is something that’s really important. There’s a lot of investment firms that get founded by an individual, and they have a type of transaction that they’re known for. And they build a financial product around themselves, and they build a team around themselves. And that type of strategy works until it doesn’t work.
And we, at Partners Group, have really tried to build a culture where it’s about the debate, right? It’s about the fight. It’s about challenging each other. It’s about the diversity of perspectives when you’re making those investment decisions, and that is an absolutely critical part to investing that far too many people fail to think about and talk about.
RITHOLTZ: Thank you, David, for being so generous with your time. We have been speaking with David Layton. He is the CEO of Partners Group.
If you enjoy this conversation, well, you can check out any of our previous 500 or so such discussions we’ve had over the past eight-plus years. You can find those at YouTube, Spotify, iTunes, wherever you like to get your podcasts from. Be sure and check out our daily reading list, you can find that @ritholtz.com. Follow me on Twitter @ritholtz. You can follow all of the Bloomberg podcasts on Twitter @podcasts.
I would be remiss if I did not thank the crack team that helps put these conversations together each week. Justin Milner is my audio engineer. Atika Valbrun is my project manager. Sean Russo is our head of Research. Paris Wald is my producer. And an extra special thank you this week goes out, if you like the new music, that is our audio signature, we just changed that. Thank you so much to Leo Sidran who did a great job on creating that, and thank you to Jaci Kessler Lubliner who helped us with our new Masters in Business artwork.
I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.