Scott Malpass' retirement from Notre Dame & private equity's reckoning & health security & the "time to build"

I didn’t know Scott Malpass, and yet it’s still a surprise to read the news of his upcoming retirement. At Notre Dame he’s been a constant, leading their endowment since before I was even born. I guess I always assumed he would lead it forever.

Since I entered the LP world out of college in 2012, people would ask if I ever had the chance to meet him when I was a student. He’s one of few legends on the LP side of the table, growing the endowment from $425 million to over $12.5 billion and in the process making a small private university in northern Indiana one of the most highly-sought LPs in the world. His retirement coincides with the beginning of the next economic crisis, but the endowment isn’t a fragile undiversified collection of stocks and bonds—he built it into what’s now a fortress impenetrable.

I have to imagine every Notre Dame graduate in the investment world gets that same question I’ve faced. And even though we’ve never met, and even though I’m far from South Bend, as both a Notre Dame graduate and an LP it’s hard not to feel the pressure to live up to the standard Scott Malpass set. He’s been an investor for us to aspire to be.

Three recent posts I’ve found interesting:

  • The Day of Reckoning for Private Equity. The rumors of private equity’s demise are… perhaps not so exaggerated. Demise is a strong word for me to use—over the past twenty years the venture capital and hedge fund worlds had their respective reckonings, and yet they still carry on. I think Ted Seides’ comparison to hedge funds is apt: “Fees compressed, the industry bifurcated into the mighty and minnows, new entrants faced uphill battles”. Maybe we’ll even see a movement towards not levering portfolio companies into debt-filled foie gras, towards an emphasis on real operational value creation. Lastly, Ted states that “every CIO I have interviewed on the Capital Allocator podcast speaks of the quality of people as foremost on their mind when making manager selection decisions”. I’m not sure who these LPs are that don’t consider the quality of the people the most important factor in diligence, but I imagine their track records are less than exemplary.

  • We need health security, not just health care. To quote Noubar Afeyan, “we have sickness systems, not health systems”. In this op-ed Noubar discusses the concept of health security, of finally treating healthcare like the public safety issue it is and devoting more resources to the prevention of diseases and other health conditions. And if now’s not the time to shift our mindsets around health, as we experience a pandemic shattering our fragile societal systems, when will it ever be?

  • IT’S TIME TO BUILD. I should spill more digital ink soon about Marc Andreessen’s call to arms. But for now, in the wake of this crisis I hope that investors and governments alike will decide to build and invest much more heavily within areas of high gravity. The life sciences, frontier technologies, the capital-inefficient spaces where venture capital truly shines—the areas that help push the future forward.

This has already been a longer post than usual. My condolences. Hope all of you enjoy the premiere of The Last Dance tonight.