From Allocator to Investor: A CIO’s Take on the Future of Private Capital
and what it means for GP's. My summary of a recent discussion with Mark Shoberg, CIO of Capital Creek Partners and former allocator at UTIMCO and Stanford Management Company
The ability to ask, listen and learn from some of the most accomplished leaders across private markets is what gives me energy.
Earlier in my career, I was searching for what I wanted to be when I grew up. For a long time, I always wanted to be a “real estate developer” but after many years of soul searching I think I have decided that I do not want to be any one thing but what I want is to be challenged and to learn from others that I respect.
My podcast and professional network affords me a near limitless opportunity to learn and at the same time fullfill’s my goal to always try to be the least qualified person in the room. This means I need to work harder, be smarter and do more. It’s a privileged, not a right. The podcast is my ‘blank canvas’ where for 45-60 minutes I can ask any question I want. Even the dumb ones or the obvious ones. Yes… there are such things.
In addition to publishing the episodes on Apple Podcast & Spotify and sharing the full recoding on YouTube, I am going to start sharing the actionable insights for GP’s from each episode. Once the episode is live, it’s in your hands. You can decide what to make of it and what to take away but for those of you that want my take, this is for you.
So let’s start with Mark Shoberg, CIO and Partner at Capital Creek Partners. Mark was first introduced to me as a client and by a mentor, Steve LeBlanc. For those of you that know Steve, you know his bar is very high so when he tells me there is someone I need to me, I jump right on it. Mark was one of those people & it just so happened he also had exceptional judgement as I came to learn his firm and my firm were working together.
Mark is the rare bread of allocator meets investment manager. He has been in the seat where GP’s clamor to meet him and every joke is the most funny joke a GP has heard. He has been forced to learn new industries, build pacing models and think about a diverse and balanced portfolio. Above all else, Mark is a fiduciary and carries that responsibility with him regardless of the sources of capital that he is investing.
On Episode 58 of The Distribution we covered a range of topics from his career story to the differences of being a allocator vs. investment manager to manager selection and more.
Below are my take-aways from the conversation and how I translate some of what Mark shared into actionable insights for GP’s. To be clear, this is MY interpretation and to hear Mark’s exact words, you can listen/watch here:
Spotify:
Apple Podcast:
YouTube:
1. Alignment & Portfolio Construction: The Foundation of Long-Term Success
Shoberg’s Insight: One of the biggest misconceptions about institutional allocators is that they have an endless spigot of capital to deploy. In reality, successful investment firms prioritize portfolio construction, balancing scale and flexibility while ensuring alignment between managers and investors.
My takeaways for Institutional GP’s:
Make sure to look beyond the headlines. Know what your potential capital sources need for their portfolio. The different databases will give you the amount of dry powder or AUM of a investment plan but in reality what you need to learn what is what the plan trying to achieve by investing in your vertical (private markets broadly include things like real estate, credit, infrastructure, energy, venture capital, technology, etc)? Is it alpha/beta? Is it to be a “diversifier” or provide a uncorrelated counter bet to a different strategy?
Implicit in this is a theme I often write about. The power of listening. Talk less and listen more. I love this saying so much that I even had it made on a mug that I often send as a reminder.. and you can buy/send too). Ask questions. Be curious. You may just learn something and maybe, just maybe your product is a solution to your prospective investors problem.
You are in the “solutions business” if your a investment manager. You need to match solutions to your investors portfolio needs.
… and remember, if it’s not a good fit, be like Maya and keep a great attitude, say thank you and move on.
2. Manager Selection & Transparency: The Differentiator in Private Markets
Shoberg’s Insight: Manager selection is everything. The best investors don’t just find opportunities; they invest in people and processes. Transparency is a key factor in evaluating managers, ensuring that investment decisions are repeatable and aligned with investor expectations.
My takeaways for Institutional GP’s:
Investors are humans. Humans want to do business and spend time with people they trust. When meeting with an investor, spend time seeking to understand their problems and offer insights. Even if those insights are NOT in service of your fund or strategy. If you play the long game, investors will remember how you made them feel. If that feeling is one of trust / credibility, you will have a better shot next time. You have one shot to make a first impression. Sometimes that first impression is made by knowing how to be honest and say “I am not your strategy/firm”.
Throughout my career, I have adopted this philosophy. As a sales leader at Juniper Square, I have said “no” to clients and prospects thousands of times. I used to tell my teammates in sales that they should expect me to reject more deals they bring to me than I approve. This isn’t because I wanted to be a hard ass or had some lesson to teach them, it was simply because we made a decision early on to ONLY take on new business where we knew we could knock it out of the park. For us, not being afraid to say ‘not right now’ has paid off in spades. Prospects remember that and will come back and listen to your pitch at a later stage and many of those ‘not right now’ conversations in the early years are some of our largest and most loyal customers… and they remember the ‘not right now’ because most are too afraid to be honest.
The parallel in investment management that I hear of most frequently these days is around LP’s asking GP’s to take on SMA’s (separately managed accounts). While this is a great way to get to know each other, many GP’s blindly and begrudgingly say yes without regard for how this strategy will convert.. or even if it’s profitable for them (hint: for most it is wildly unprofitable). This is not a healthy relationship for either party and GP’s and LP’s must find ways to be more transparent with each other and to find partnerships that are durable and scalable.
Lastly, and it bears repeating again and again and again. Investors want good news fast and bad news faster.
They don’t want your story. They want to see your data and create their own story. Having access to the data enables them to be educated which in turn up-level’s the discussion. If your story and their story don’t match, you will have time to share your version but remember, the data is the data and the story is the story. Being transparent with your data using tools like Juniper Square helps to build customer trust. At the end of the day, most LP’s tell me it’s not how you behave when things are going great but it’s how you behave and communicate when things go sideways. This is why allocators must spend time underwriting not just the investment performance but the people. People and relationships matter. They also can’t be replaced by AI.
3. Operational Excellence & Alignment: Structuring for Success
Shoberg’s Insight: The most effective investment firms operate with intentionality. Success is not just about identifying strong managers or making the right allocations—it’s about building an investment platform that is both scalable and nimble. Firms that integrate technology, efficient processes, and disciplined execution will outperform in the long run.
My takeaways for Institutional GP’s:
GP’s need to fundamentally rethink their business models with a focus on scalability and agility. This requires getting very clear on what differentiates you and what doesn’t. For the non-differentiated parts of your business, GP’s would be well served to outsource them. There are many partners but finding ones like my firm, Juniper Square, that are focused, well funded and trusted by the industry is a good start. We want to be the most important partner to our GP customers and help them with all the ‘undifferentiated heavy lifting’ (as Jeff Bezos of Amazon likes to say).
In addition to focusing on differentiation, GP’s also need to focus on profitability. With the recent surge in M&A and the “private equitization” of investment management, GP’s that are able to build firms that have durable businesses will have more success in attracting strategic capital and scaling their businesses going forward.
A big part of differentiation, profitability and enterprise value comes back to the people. Creating incentives to attract and retain the best talent is critical to success. Ironically as GP’s focus on both attracting and retaining talent and creating more operational efficiency and enterprise value they are often looking to find great homes for their accounting teams. Juniper Square has been the beneficiary as we have ‘lifted out’ teams from GP’s and also are the most attractive place for fund accountants to work in private markets (or so we think)… The point here is not that Juniper Square is great but that there are two sides to every story. Just think for a minute… could it be true that it may be better for your org to outsource something you do in-house today? If yes… I bet your worried about your people… after all, I just spent paragraphs writing about how essential people and trust are.. but think again.. could it be possible that your people may be happier working for a firm that is investing in tools and tech that make them more efficient, accurate and happier in their job? It could be. If this is the case, perhaps a conversation with your partners and colleagues is in order to discuss how you can help yourself and your people build a scalable and nimble business.
I hope you liked my take on this episode. I would love your feedback. Tell me what you want more of, less of and to keep seeing.
Want to hear more? Listen to the full episodes of The Distribution on Apple Podcast, Spotify or watch it on YouTube here.