Episode summary
Inside WashU's Endowment Fund | SpaceX Made Up 20% of Out AUM | Scott Wilson
20VC
· · 57 min · Hosts: Harry Stebbings · Guests: Scott Wilson
Summary
Scott Wilson argues that WashU’s outperformance came from a simple but aggressive structure: concentrate in the best ideas, back strong external managers, and add directly to companies when the team has independent conviction. He says the endowment was just under $8 billion when he arrived and is now just under $20 billion, after a rapid portfolio overhaul that cut more than half the book in his first week and eliminated 36 or 37 hedge funds.
He says the firm would target 70% to 80% in privates if it did not have payout constraints, but the real edge comes from direct and co-investment exposure, which now makes up more than half of the private portfolio. Scott Wilson says SpaceX became over 20% of the portfolio at one point, and that holding winners longer was one of the biggest sources of gains he initially undercaptured.
On venture and AI, Scott Wilson is skeptical of mega-funds, evergreen structures, and today’s private-market valuations. He thinks many AI companies will not exist in 10 years, that pricing power may not hold, and that a shakeout is coming, even while WashU continues to find selective opportunities in Europe, China, and public markets.
Key takeaways
- Scott Wilson says WashU would target 70% to 80% privates if payout constraints did not force more liquidity.
- He says more than half of the private book is in directs and co-invests, and that this drove outperformance versus the peer group.
- Scott Wilson says SpaceX at one point exceeded 20% of the portfolio, but governance and discipline were needed to hold through volatility.
- He thinks private AI valuations reflect “stupidity” and expects a shakeout as many companies fail to survive.
- He says his biggest mistake was not adding more capital to winners once they had already appreciated.
- He prefers smaller funds and says discipline around valuation is the main reason he churns managers.
Notable quotes
“Price is what you pay. Value is what you get”
“If you didn't have the required net outflows, would you do anything differently in terms of capital allocation”
“We would probably have 70 80% targeted privates”
“At one point, north of 20% of the portfolio is in SpaceX”
“I think there will be a shakeout”
How the episode opens
We had 36 37 hedge funds in the portfolio. And when we got rid of them all, you know, 80 90% of our time is just out meeting individual companies. And that's very different than probably how most of your LPs spend their time.
At one point, north of 20% of the portfolio is in SpaceX. How often do you hear one of the biggest allocators in the world reveal how they make incredible investment decisions? Very rare.
This CIO today has taken their institution from $8 billion to close to $20 billion today. I'm so excited to welcome an OG of the endowment fund space, Scott Wilson at WashU.
Half of our portfolio is in our top 50 look through positions. Our model doesn't really work with the mega funds. They don't need our capital. We hardly ever talk about like fund performance. We only really talk about the underlying exposures in the portfolio. Price is what you pay. Value is what you get.
Ready to go. Scott, I'm so excited for this. One of the most respected in the industry. Thank you so much for joining me today. — Yeah, well, thanks for having me. — Not at all, but I'd love to start with a couple of lessons from the past. You obviously had roots with Grenell, spent several years there building out an incredible book. What are some lessons for you from Grenell that really stuck with you and you took with you to WashU and impacted how you think about building out your book with WashU?
We ran a similar strategy at Grenell. So I I was fortunate to to work for this guy David Clay who hired me at Grenell and uh Grenell had a long history of kind of a mix of direct co-investments and uh and external partners that managed the portfolio.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- endowment investing
- private markets allocation
- venture concentration
- ai valuations
- portfolio drawdowns
Companies and tickers mentioned
- SpaceX
- Sequoia Capital
Watch the episode
Watch “Inside WashU's Endowment Fund | SpaceX Made Up 20% of Out AUM | Scott Wilson” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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20VC, this episode and its artwork belong to Harry Stebbings. Octagon is not affiliated with the show; this page is an independent summary.
