Episode summary
How Billionaires Build Their Portfolios
How I Invest With David Weisburd
· · 30 min · Hosts: David Weisburd · Guests: Jonathan Dane
Summary
Jonathan Dane argues that family-office advice breaks down when large banks mix custody, products, and recommendations under one roof. He says independent advisers can look across the whole universe without being pushed into their own firm’s products, which matters most when a founder has just sold a business and estate planning, QSBS, and family control usually outrank investments on the priority list.
He draws a sharp line between Gen 1 and Gen 2 wealth. Gen 1 is built by operators who are still in growth mode, while Gen 2 starts from preservation and legacy, and that difference changes how families think about risk, governance, and portfolio construction. Dane says estate planning should begin years before a liquidity event, including trusts and early gifting of shares, because the tax savings can be millions.
For large families, he says portfolios become dominated by alternatives, often well over 50%, with liquidity management as the first constraint. He is skeptical of overcommitting to long-dated venture funds, especially when DPI is weak, and prefers lower middle market private equity in the Rust Belt for its inefficiencies and operational upside. He also says AI should speed research and reporting, but not replace judgment in investment decisions.
Key takeaways
- Jonathan Dane says independent advisers can be more objective because they are not tied to a bank’s product factory or compensation incentives.
- Dane says Gen 1 wealth tends to be aggressive and operator-driven, while Gen 2 starts from preservation and legacy.
- Dane says entrepreneurs should start estate planning years before liquidity, including trusts and early gifting of shares, because the tax savings can be millions.
- For a typical $1 billion family office, Dane says alternatives dominate the portfolio and liquidity management should come first.
- Dane says lower middle market manufacturing in the Rust Belt is attractive because it combines inefficiency with real operational value creation.
- Dane says AI belongs in research, data extraction, and client communication, not in private-market investment decisions.
Notable quotes
“it's only helpful if it helps”
“when half of your firm is building products and your bonus structure and your incentive structure is all about those products”
“we don't invest in funds, we invest in people”
“liquidity management is one of the biggest pieces of investing that people don't care enough about”
“the answer is always no if you don't ask”
How the episode opens
Jonathan, I've been very excited to chat. Welcome to How Invest Podcast. — Thank you, David. Happy to be here today. — So, Jonathan, you're the CIO at Define Capital where you work with families with with a couple billion dollars, but before that, you were at both Goldman Sachs and Jeff. What made you realize when you were at Goldman and Jeff that there was a gap in the family office market?
The sell side is a really interesting place. You learn a lot there. I enjoyed my time, but I think the longer you're on the sell side, the more you realize it's a factory that's a consensus machine.
And what I mean by that is, so one, everything the sellside does is about not rocking the boat. And so they want to make sure that, hey, if you're moving things around the edges, whether that's smoothing a circle, making things better, you don't want to rock a boat. Just want to kind of keep it status quo, adjust here, there, but no big changes.
But the other big thing on the south side is that there's this structural problem. You have institutions that are doing custody, advice, and product under one roof. And when you do that, you have this situation where what advice you're giving may not be the best advice for a client.
And so what we started to realize, what I've realized more and more is that let's say you're working with a family office that or a founder that just sold a business for 30 million, $50 million, $60 million. And all of a sudden these institutions are talking about investments, non-stop investments. Hey, let's go into some great forward swaps.
I have this great product here, this private fund here, this there.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- independent advice
- family office portfolio construction
- estate planning after liquidity
- private equity and venture funds
- liquidity management and overcommitment
Companies and tickers mentioned
- GS
- JEF
- Goldman Sachs
- Jefferies
- AlphaSense
Watch the episode
Watch “How Billionaires Build Their Portfolios” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
