E138: Do Relationships Drive Financial Returns? w/Jeremy Heer

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What makes a super connector a super connector?

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A large network of interesting people, broad
knowledge of who's who across a given industry,

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a given vertical, a given subject matter, and
really just the the ability to make connections

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and bring people together and the willingness
to do

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that.

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Super connectors are these unique unicorns that
are connected to thousands, if not tens of

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thousands of individuals.

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What special skills do they have and what view
of the world do they have?

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They're able to maintain relationships across a
large number of people and to connect with them

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on some way.

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They usually have very good recall of names,
faces, places.

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These sort of things if you're if you're
talking to someone and you talk to them a year

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later than me.

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I remember a year ago, we talked about x.

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Now how does that come out?

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You have a very unique role, and one of your
responsibilities is to be one contact point

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away from anybody in the world.

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Tell me about that.

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All investment offices kinda have this stream
of inbound activity.

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You're getting calls, emails, and all that all
the time, and we do have a bunch of that too.

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But we think in order to really set up
ourselves up for kind of top decile returns, we

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need to be able to source and reference all
kinds of things across the entire universe of

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investing.

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So that could be other, it could be managers,
it could be other lps, it could be brokers,

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service providers, bankers, founders, CEOs,
academics, government officials, whatever it

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takes.

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Right?

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There and the whole idea is to be able to, you
know, talk to experts, talk to people, and gain

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information across places that we might
otherwise be able to get it.

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And and there's also University of Illinois
aspect to the engagement part.

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There are something like 900,000 active
Illinois alumni out there across the system,

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and we like to engage that ecosystem whenever
possible.

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A lot of your role involves building
relationships with super connectors.

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What are super connectors?

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I love the term.

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I don't know if I coined that term, but, I I do
use it when I talk about this, and I think it's

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really important to know those types of people.

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I think a super connector is I they're actually
people that kind of thrive on making

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connections.

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They tend to have very large networks, and very
broad networks, and they are willing to make

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and take introductions.

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I think that having a few of those people in
your network, if your job is to be a networker

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and to be externally focused, is absolutely
essential.

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There are I there are a few folks that I
consider to be super connectors.

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I've kind of modeled the term after a few of
them.

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And they tend to have very large networks, and
you'll often hear, you know, you hear them

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describe as everybody knows this person.

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Everybody knows that person.

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I think those people are are essential.

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What makes a super connector a super connector?

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A large network of interesting people, broad
knowledge of who's who across a given industry,

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a given vertical, a given subject matter, and,
really, just the the ability to make

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connections and and and bring people together
and the willingness to do that.

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Super connectors are these unique unicorns that
are connected to thousands, if not tens of

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thousands of individuals.

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What special skills do they have, and what view
of the world do they have?

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They're able to maintain relationships across a
large number of people and to connect with them

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on some level.

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They usually have very good recall of names,
faces, places.

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The the the sort of things if you're if you're
talking to someone and then you talk to them a

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year later, they're like, yeah.

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I remember, like, a year ago, we talked about
x.

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You know?

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How did that turn out?

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What do you you know?

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Are you still working on that?

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Is there anything interesting with that?

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Now those sorts of things, they're just very
good at that.

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I I think that they tend to be very giving
people, and they tend to be you know?

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They they know that by by being a giving person
and and kind of putting out into the into their

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network, that they'll be able to that that will
come back to them, and they'll gain some

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benefit from that professionally, personally,
whatever.

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It it seems that these super connectors have
these nonfinancial drives.

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What are these nonfinancial drives that drive
many super connectors?

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Managing a venture capital firm is complex.

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Fundraising, reporting, compliance, it all adds
up.

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Non financial is a great way to put it.

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They're just driven by, you know, providing
good in the world a lot of the time.

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And, you know, they know that that's gonna come
back to them in some form or some function.

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Yeah.

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It's interesting.

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I call it strategic people pleasing.

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Well, that's a that's a great way to put it.

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You know, I love that, and I think that's
exactly right.

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You know, different people are driven by
different things.

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Right?

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And I I think that I'm driven by that in some
way.

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I think other people are much more internalized
than, you know, they'd rather just, you know,

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be in their office and, you know, let things
come to them.

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And and I I like to be out there and and
meeting people and making kind of random

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connections and and, you know, and giving out
to the world.

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It seems that some of these drives come deeply
rooted in somebody's DNA.

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For example, I found a way to leverage that.

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I enjoy telling people stories.

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I enjoy making people shine in front of an
audience.

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I found a way to strategically leverage that
versus fighting it.

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I couldn't agree more.

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I feel exactly the same way.

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I love to help other people get things done.

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I love to help other people, you know, shine.

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And, of course, I don't mind, you know, being
out on stage with them sometimes too.

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Right?

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And I think that's part of it.

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You have to be willing to put yourself out
there in order to be able to do this.

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Part of part of truly being able to connect
with people is to be memorable in some way

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sometimes.

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Right?

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And I think that's an important part.

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Outside of having a neck tattoo or, walking
around in a in a biker jacket, how does one go

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about being memorable to others?

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Part of it is being willing to put yourself out
there a little bit.

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You mentioned storytelling.

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I think storytelling is a great way to connect
with people.

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You know?

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I I I love to get in in a room with people and
tell them a story about how, you know, I met

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Daryl Hall at an annual meeting once or about
how, you know, my first job was in a both of

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Wall Street kind of place or, right.

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You know, I if you can bring a story to life,
people are gonna remember you for that.

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I I think that's really important.

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And another way, of course, is to have outside
interests and talk about those, you know, or an

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interesting professional story.

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Being able to bring a story to life and being
able to to kind of peak people's interest, I

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think, is important.

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It's this paradoxical mix of sharing and being
authentic about your personal life while also

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being highly relevant and useful in a business
context.

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Very hard to do.

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I agree.

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And and but but I think it's the the people who
are the best in this can do that, and they can

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form that connection with people on on both
levels.

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Part of your role at University of Illinois
Foundation, you attend more conferences really

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than anyone I've ever met.

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Tell me about what conferences you go to, and
what do you hope to get from these conferences?

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I've attended everything from the very, very
large ones where you have thousands of people,

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and those are great for relationship
maintenance and for, I I've talked about it a

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couple times here.

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I I call it stochastic networking where there's
a random component.

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Sometimes you you you make connections with new
people because they happen to know people that

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you know and you happen to be the same place.

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So you guys should really get together.

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That kind of thing.

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Right?

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Or sometimes, I'll sit next to somebody
randomly at at lunch, at dinner, at a

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networking event or, the bar after that or a
side event around a big conference.

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And that oftentimes, that's a wonderful way to
make connections across the industry.

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Small conferences are really bet are more about
getting to know people better, and there you

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can really go in deeper and talk to people
more.

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Sometimes that's what you're looking for.

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Oftentimes, that'll be around the theme around
an industry.

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Sometimes, like, I go to trade shows, and trade
shows tend to be really more about learning,

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and that's about you know?

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So that'll be much more about the content
there, but I'll also be trying to make those

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sorts of random connections.

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Oftentimes, I'll I'll I'll I'll see the
attendee list at a time, and so I've done my

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homework.

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But sometimes there's a random piece to it that
you just can't you know, that that you need to

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have.

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Any of the mid sized conferences will split the
difference between those.

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Those that's kind of how I think of the
conference ecosystem probably.

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I think a lot of people focus a lot of time on
how they conduct meetings, how they present

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PowerPoints, but no one really talks about best
practices when it comes to networking at a

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conference.

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How do you go about networking at a conference?

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Usually, I've done homework.

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I've I've seen an attendee list or at least a
list of firms attending, so I kinda have an

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idea of who's gonna be there.

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I think that's really, really important.

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I don't think people prepare enough for
conferences probably speaking.

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I think you really have to have an idea of
who's going to be there, what you're trying to

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accomplish.

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Oftentimes, you've connected with some of the
people that are there, and so you'll try to

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meet up with them and catch up with them and
ask them who they're talking to that's

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interesting there.

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Usually, there'll be maybe one or two people
that I don't know and that I know that I want

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to get to get in contact with because, you
know, there might be some interest there.

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And so I'll try to to get to find them however
I can.

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Most conferences will have, you know, at a
minimum, some sort of networking breaks or some

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sort of, maybe I have a messaging app, and I'll
try to mess reach out ahead of time with them.

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Again, preparation is really key for all this
stuff.

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For someone who's looking to go to more
conferences or gain more value from

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conferences,

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practices.

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Number one is obviously do your homework.

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I've said it a couple times already.

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You must prepare for a conference if you're
gonna met if you're gonna optimize your time

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there.

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I always tell people to try to leave room for
that sort of random stochastic component, and

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I'll reiterate that now.

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I think that some of the best things that
happen at conferences, some of the best things

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happen to me at conferences have been things
where I saw somebody that I knew.

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They happen to know somebody else to introduce
me to them, and I want to spend an hour getting

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to know that person, and it turned into
something.

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And you have to remember too, this is really
important.

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A lot of people are are some people are really
outgoing.

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Some people are not as outgoing.

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But if you're at a conference and other people
are at that conference, they are there to do

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two things.

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They're there to learn, and they're there to
meet people and and and or maintain

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relationships.

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You have to remember that.

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Look.

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Everybody's in the same boat you are.

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So it's okay to just go up and talk to some to
to somebody randomly.

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Said another way, no one goes to a conference
to sit in front of a computer and not be

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bothered.

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We chatted last time on nuclear, something I'm
I'm very bullish on.

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What is your thesis on nuclear?

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Well, I'll start by saying that I am still
doing research on nuclear.

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But broadly, and this fell out of the work I
did about the energy value chain in general.

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I think it's the best source of energy out
there.

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It provides base load power.

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Right?

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The energy return on energy invested is the
highest than based of all the different energy

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sources by a decent amount.

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The problem with it from an investment
standpoint is that it's hard to invest because

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of the long cycle, and the long cycle has a ton
of red tape.

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Leads to cost overruns, lower returns on
investment.

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So capital's hesitant to go there.

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But right now, there's a ton of buzz around it.

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You've got new designs.

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You have the small modular reactors, and you
have projected energy demands that, let's face

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it, the science around, other things like solar
and wind.

229
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It might be hard for that to meet the the
demand.

230
00:11:29,684 --> 00:11:34,884
And so I feel like newer designs, more
competition in the space is gonna create the

231
00:11:34,884 --> 00:11:38,425
conditions for a much needed renaissance in the
nuclear industry.

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And I'm hopeful around this.

233
00:11:40,179 --> 00:11:44,179
And I'm I'm right now, I'm working on whether
or not it's really an actionable investment

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00:11:44,179 --> 00:11:44,980
thesis at this time.

235
00:11:44,980 --> 00:11:49,059
When we last chatted, you mentioned that DOGE
could play a critical part in the nuclear

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00:11:49,059 --> 00:11:49,559
thesis.

237
00:11:49,940 --> 00:11:52,679
How does Joe DOGE relate to nuclear?

238
00:11:53,394 --> 00:11:57,075
Well, the single biggest problem with the
nuclear space other than having some of the

239
00:11:57,075 --> 00:12:02,835
worst PR, any industry ever is this very, very
long investment cycle.

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00:12:02,835 --> 00:12:06,914
Building new reactors is very hard to do, and
there's a ton of red tape and a ton of

241
00:12:06,914 --> 00:12:08,534
government intervention throughout.

242
00:12:09,029 --> 00:12:13,690
And, you know, my understanding of those is
that it's not just about cutting spending.

243
00:12:13,750 --> 00:12:14,470
Well, that's great.

244
00:12:14,470 --> 00:12:16,149
I think I think that needs to happen.

245
00:12:16,149 --> 00:12:18,009
But it's really about streamlining government.

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00:12:18,309 --> 00:12:22,809
And I am very hopeful that part of what they're
going to do is to tackle permitting reform.

247
00:12:22,904 --> 00:12:24,504
And they tackle permitting reform.

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Nuclear is a prime, prime target for that.

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So, I don't I'm still working on how confident
I am about that.

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But, I, in my mind, it's a no brainer as as a
thing that they should be having.

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Nuclear seems to be this consensus view as a
great energy source among some of the smartest

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00:12:43,899 --> 00:12:44,620
people I know.

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00:12:44,620 --> 00:12:49,519
In fact, I've never actually heard somebody
that had a contrarian view on that.

254
00:12:50,204 --> 00:12:52,304
Steelman their argument against nuclear.

255
00:12:53,084 --> 00:12:54,125
Thank you for listening.

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00:12:54,125 --> 00:12:57,884
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not miss any future episodes, please click the

257
00:12:57,884 --> 00:12:59,584
follow button above to subscribe.

258
00:13:00,284 --> 00:13:03,740
Nuclear has the worst PR of any industry ever.

259
00:13:03,740 --> 00:13:03,899
Right?

260
00:13:03,899 --> 00:13:11,199
So people it's poorly understood and vilified
by a lot of, people who, profess to be

261
00:13:11,259 --> 00:13:14,720
environmentalists, and it it doesn't I don't
really understand it.

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00:13:14,939 --> 00:13:21,095
The, I I think there's a lot of people that are
very committed to solar and wind as being the

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00:13:21,095 --> 00:13:23,014
answers to everything, and they're they're
great.

264
00:13:23,014 --> 00:13:27,335
But, they don't provide baseload power, so you
always have to have natural gas or something

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else with them.

266
00:13:28,215 --> 00:13:29,894
So what's the case against nuclear?

267
00:13:29,894 --> 00:13:34,500
The case is that you think there's that the
energy return on energy invested is not as big

268
00:13:34,720 --> 00:13:36,419
as as as people have said.

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00:13:36,480 --> 00:13:41,059
You think that there are more and different
problems that they cause in the environment,

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00:13:42,799 --> 00:13:48,615
and or you think there's gonna be revolutionary
changes in technology that will cause other

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00:13:48,615 --> 00:13:54,375
energy forms to be, able to provide base load
power, rather than intermittent power and be

272
00:13:54,375 --> 00:13:57,435
able to, reduce greenhouse gas at the same
time?

273
00:13:57,575 --> 00:14:03,769
The best argument that I've heard of is that if
The US deploys nuclear energy at scale, other

274
00:14:03,769 --> 00:14:05,629
countries will want to do that.

275
00:14:05,769 --> 00:14:11,449
And the problem with that is that nuclear
energy can be weaponized, and through a

276
00:14:11,449 --> 00:14:14,429
backdoor, other countries could get nuclear
weapons.

277
00:14:15,235 --> 00:14:15,735
Yes.

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00:14:16,115 --> 00:14:19,875
There is an aspect of that from from it's my
understanding that a lot that in some of the

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00:14:19,955 --> 00:14:25,235
especially in some of the newer designs,
they're using much less enriched uranium, and

280
00:14:25,235 --> 00:14:28,535
so it's it's very it's much harder to turn that
into a weapon.

281
00:14:29,570 --> 00:14:36,610
The arguments out there, but as for how,
relevant it is or or what the probability of

282
00:14:36,610 --> 00:14:40,450
that is, I mean and and you have to probably
wait, but you also have to think about the the

283
00:14:40,450 --> 00:14:41,649
magnitude of the effect.

284
00:14:41,649 --> 00:14:46,355
So, you know, it's a tail event with a with a
with a large probability loss.

285
00:14:46,774 --> 00:14:47,014
Yeah.

286
00:14:47,014 --> 00:14:48,054
The argument's there.

287
00:14:48,054 --> 00:14:54,774
I'm not sure how, if you probably weight it,
how it how it stacks up against the the obvious

288
00:14:54,774 --> 00:14:56,054
benefits of doing it.

289
00:14:56,054 --> 00:15:00,455
Prior to University of Illinois, you spent 12
and a half at one of the top endowments in the

290
00:15:00,455 --> 00:15:02,279
world, University of Chicago.

291
00:15:02,500 --> 00:15:07,300
I really enjoyed my time at University of
Chicago, and that's that's a bunch of really,

292
00:15:07,300 --> 00:15:08,180
really smart people.

293
00:15:08,180 --> 00:15:11,720
And I, again, I can't be glowing enough about
that place.

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00:15:12,899 --> 00:15:16,680
When I got there, I knew virtually nothing
about endowment and foundation investing.

295
00:15:17,195 --> 00:15:19,855
So to say that I learned a lot there is an
understatement.

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00:15:20,315 --> 00:15:28,014
My first few projects involved, Monte Carlo
simulations of the university's financials

297
00:15:28,154 --> 00:15:31,250
based on capital market drivers like growth and
inflation.

298
00:15:31,309 --> 00:15:38,029
And the idea was to illustrate the risk return
trade off between different levels of, equity

299
00:15:38,029 --> 00:15:39,169
risk in the portfolio.

300
00:15:39,870 --> 00:15:44,894
So the idea was if you had equity beta point
eight, then you had a certain x percent chance

301
00:15:44,894 --> 00:15:48,754
of the 25% drawdown, y percent chance of not
keeping up with inflation.

302
00:15:49,134 --> 00:15:49,375
Right?

303
00:15:49,375 --> 00:15:52,894
The sorts of risk measures that that an
investment committee would be interested in.

304
00:15:52,894 --> 00:15:54,894
So you would compare that against wealth.

305
00:15:54,894 --> 00:16:01,789
Also, in twenty five years, your expected
wealth is, you know, $3,030,000,000,000 or

306
00:16:01,789 --> 00:16:05,230
50,000,000,000 as opposed to $1,010,000,000,000
or 12,000,000,000 or, you know, take your

307
00:16:05,230 --> 00:16:05,549
numbers.

308
00:16:05,549 --> 00:16:06,049
Right?

309
00:16:06,110 --> 00:16:11,735
The idea was to to illustrate that and make it
simple for someone in an investment committee

310
00:16:11,735 --> 00:16:15,495
seat to be able to decide this is our should
this is what our overall risk posture should

311
00:16:15,495 --> 00:16:15,995
be.

312
00:16:16,295 --> 00:16:16,795
Okay?

313
00:16:17,014 --> 00:16:19,095
That that in itself was incredibly instructive.

314
00:16:19,095 --> 00:16:19,254
Right?

315
00:16:19,254 --> 00:16:23,495
It would nobody else was doing things like that
to my knowledge and learning to work with an

316
00:16:23,495 --> 00:16:27,769
investment committee and learning about the
different stakeholders in a in an E and F,

317
00:16:28,090 --> 00:16:31,470
format, those were just fascinating lessons.

318
00:16:31,610 --> 00:16:34,110
What did you learn while you were at University
of Chicago?

319
00:16:34,169 --> 00:16:39,245
I learned how to work within a large investment
team and and and try to, you know, find, you

320
00:16:39,245 --> 00:16:41,004
know, common ground among different people.

321
00:16:41,004 --> 00:16:45,024
And I spent some time doing private equity and
venture capital deals, and I spent some time,

322
00:16:45,404 --> 00:16:46,465
doing hedge funds.

323
00:16:46,605 --> 00:16:50,925
So I learned how to underwrite investments,
both in terms of re upping with existing

324
00:16:50,925 --> 00:16:52,830
managers as well as underwriting brand new
ones.

325
00:16:52,990 --> 00:16:57,549
I learned a ton and learned that endowment and
foundation investing really fit well with

326
00:16:57,549 --> 00:17:00,370
myself, my role, you know, philosophy and way
of doing things.

327
00:17:00,750 --> 00:17:05,150
Your role, which from what I understand is
unique, no other endowment in the world has

328
00:17:05,150 --> 00:17:07,734
somebody in charge of relationships.

329
00:17:08,355 --> 00:17:11,015
It was created by your CIO, Travis Shore.

330
00:17:11,474 --> 00:17:15,414
What was his vision for the role, and what was
the rationale for creating your position?

331
00:17:15,634 --> 00:17:18,480
Most places tend to combine all of that into
roles.

332
00:17:19,119 --> 00:17:23,519
Like, the private equity person will be in
charge of doing all of that in their private

333
00:17:23,519 --> 00:17:24,419
equity sphere.

334
00:17:24,559 --> 00:17:27,759
Or if it's a a more generalist team, you might
have somebody who's in charge of public or

335
00:17:27,759 --> 00:17:32,125
private markets, and they'll be in charge of
doing all of that in their sphere.

336
00:17:32,424 --> 00:17:39,065
I think Travis thinks that there's an
efficiency gain from having somebody who's just

337
00:17:39,065 --> 00:17:39,945
focused on that.

338
00:17:39,945 --> 00:17:44,039
He thinks that it'll it'll get us into things
that other places may not get into and that

339
00:17:44,039 --> 00:17:49,399
those should provide, excess returns above and
beyond the sorts of things you get just to be

340
00:17:49,399 --> 00:17:50,539
good at picking managers.

341
00:17:51,399 --> 00:17:56,200
Could also get you into new asset classes
before there's even an industry or a person to

342
00:17:56,200 --> 00:17:57,740
hire to cover that asset class.

343
00:17:57,845 --> 00:17:58,005
Yeah.

344
00:17:58,005 --> 00:17:58,964
That's an excellent point.

345
00:17:58,964 --> 00:17:59,204
Right?

346
00:17:59,204 --> 00:18:03,525
And that's that's the beauty of the generalist
model in in general is that you can you can do

347
00:18:03,525 --> 00:18:04,025
that.

348
00:18:04,565 --> 00:18:08,484
Having somebody being the tip of the the spear
and and going out there and being an idea

349
00:18:08,484 --> 00:18:13,589
generator and and a searcher and a hunter, that
increases your probabilities of getting there.

350
00:18:13,589 --> 00:18:16,809
And a lot of what this is is increasing the
sense of probabilities.

351
00:18:17,109 --> 00:18:21,609
That's one of the reasons for this paradox
where in VC historically, generals investors

352
00:18:21,750 --> 00:18:27,345
have outperformed and had these hundred x funds
versus these specific funds have not done as

353
00:18:27,345 --> 00:18:27,505
well.

354
00:18:27,505 --> 00:18:31,424
And one of the explanations is they invest into
industries before they even exist.

355
00:18:31,424 --> 00:18:33,605
So they invest into Facebook before they're
social.

356
00:18:33,825 --> 00:18:36,244
They invest into Coinbase before there's
crypto.

357
00:18:36,545 --> 00:18:40,305
So these are the kind of these power law
returns that come from investing to something

358
00:18:40,305 --> 00:18:41,444
before there's a space.

359
00:18:41,890 --> 00:18:43,410
I think that's an excellent point.

360
00:18:43,890 --> 00:18:44,130
Yeah.

361
00:18:44,130 --> 00:18:47,169
I I think that's one of the reasons why I like
seed investing a lot.

362
00:18:47,169 --> 00:18:47,329
Right?

363
00:18:47,329 --> 00:18:50,450
It's because, you know, in seed, you you tend
to you you see that.

364
00:18:50,450 --> 00:18:57,085
But the problem seed, of course, is that, you
know, if you miss one deal, right, then it can

365
00:18:57,085 --> 00:18:58,305
ruin your entire fund.

366
00:18:58,444 --> 00:19:00,765
And, right, we we tend to like concentration
here.

367
00:19:00,765 --> 00:19:03,345
So it it it it's it's a paradox for sure.

368
00:19:03,404 --> 00:19:07,085
What do you wish you knew before starting your
role as investment head of investment research

369
00:19:07,085 --> 00:19:07,744
and engagement?

370
00:19:08,130 --> 00:19:11,970
I really wish I knew how hard it was gonna be
to fly a plane and build at the same time,

371
00:19:11,970 --> 00:19:12,369
David.

372
00:19:12,369 --> 00:19:13,670
It's it's really difficult.

373
00:19:14,450 --> 00:19:17,670
Right, because I wanna add value right now.

374
00:19:18,210 --> 00:19:20,230
Everybody wants to add value right now.

375
00:19:20,744 --> 00:19:26,924
And the value of my role is very long run, and
it's gotta be very it has to be very patient.

376
00:19:27,224 --> 00:19:31,545
And so I I, you know, I don't think I
appreciated that part of it when I came in

377
00:19:31,545 --> 00:19:31,944
here.

378
00:19:31,944 --> 00:19:39,200
And I think that that that's one of the bigger
things I've learned is that, oftentimes, adding

379
00:19:39,200 --> 00:19:42,079
value, right, is not something you can measure
right away.

380
00:19:42,079 --> 00:19:44,820
It really it really does take a long time to do
these things.

381
00:19:44,960 --> 00:19:49,765
Well, Jeremy, we've we've only known each other
for for a little bit, but you've already been

382
00:19:49,765 --> 00:19:53,924
incredibly helpful, and I'm really looking
forward to our relationship over the next few

383
00:19:53,924 --> 00:19:54,424
years.

384
00:19:54,644 --> 00:19:58,565
I am too, and I can't wait to meet you in in in
person so we can, you know, have a beer, and I

385
00:19:58,565 --> 00:20:00,265
can find out the dark side about David.

386
00:20:00,404 --> 00:20:00,884
Absolutely.

387
00:20:00,884 --> 00:20:01,785
Thank you, Jeremy.

388
00:20:02,849 --> 00:20:03,730
Thanks for listening.

389
00:20:03,730 --> 00:20:06,450
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390
00:20:06,450 --> 00:20:10,309
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