Episode summary
Why the Best Investors Ignore Silicon Valley
How I Invest With David Weisburd
· · 1 hr 1 min · Hosts: David Weisburd · Guests: Jason Koenig
Summary
Jason Koenig argues that the best opportunities are often hidden in plain sight, especially in overlooked industrial businesses far from Silicon Valley and New York. He says ITE began by looking at the middle of the country, where rail, trucking, shipping, and other industrial assets were being ignored while investors chased technology and AI.
He traces the firm’s start to watching trains, then realizing the rail assets underneath them could generate attractive cash flow, inflation protection, and downside protection. With help from industry veteran Jim Uner, ITE raised about $60 million from friends and family, proved the model, and then expanded as first-mover advantage created a moat. Koenig says the firm now manages $6.5 billion because it kept buying assets others overlooked and could articulate the story in a way that stood out.
A major theme is leadership and culture. Koenig says scaling requires hiring one to three years early, rewarding teamwork over individual empire-building, and keeping a flat, collaborative organization. He argues that investing and leadership are both psychological exercises: the key is listening, understanding motivation, and balancing founder ego with humility as the firm grows.
Key takeaways
- Koenig says ITE found opportunity in industrial assets because investors were fixated on coastal technology and ignored the middle of the country.
- He says the rail business looked attractive because it offered cash flow, inflation correlation, downside protection, and tax efficiency.
- Koenig says the firm raised about $60 million at the start, then quickly added another $110 million after proving the model.
- He says the biggest scaling challenge is leadership: hiring ahead of need, preventing silos, and keeping compensation aligned with teamwork.
- Koenig says great investing is psychological, because understanding why people act is as important as understanding the asset.
Notable quotes
“we started noticing industry and industrial assets about 15 16 years ago when again this was right when we were emerging from the financial crisis”
“I started actually remember thinking who owns these assets? Like it never occurred to me”
“we saw an opportunity where what I saw was great cash flow inflation correlation downside protection tax efficiency”
“The biggest challenge of scaling has been I'll get back to leadership and management”
How the episode opens
Jason, you've built it into a platform that has $6.5 billion assets under management going after an overlooked sector. Why do you think the markets underpric overlooked sectors? I grew up in the Midwest.
Actually, I'm looking at on the wall you've got a license plate that says Fab Five. Actually played against Chris Weber in basketball in high school. I'm about 510 on a good day.
So, I decided I had to go into asset management. We've grown up, at least you and I, in a period of time when everybody's looking at the coast. You're looking at Silicon Valley for what's coming out of it technology-wise and now it's AI or you're looking at New York City where it's all finance, but nobody really paid attention to what's going on in the middle of the country, which happens to be most of the country.
And what we saw in the middle of the country was industry. And the rhetoric that we're seeing today is that industry's been forgotten. And we started noticing industry and industrial assets about 15 16 years ago when again this was right when we were emerging from the financial crisis when most everybody I knew was paying attention to their iPad and what app could they make and we looked the other way and said well what's that thing rusting in the middle of the country and moving things around.
Maybe you could unpack that from a capital markets perspective. Why does that translate into these opportunities? — The industrial supply chain actually grew up with our country. our rail system, our shipping system, our trucking system. It's incredibly flexible, but it grew up very regionally because our country grew up geographically regional. You had grain in the Midwest, you had the energy in in Texas, you had lumber in the Northwest.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- overlooked industrial assets
- transportation infrastructure investing
- culture and leadership
- scaling an investment firm
- investing psychology
Companies and tickers mentioned
- ITE Management
- Avenue Capital
- Hale Capital Management
- Kirkland & Ellis
- Latham & Watkins
- Cooley
Watch the episode
Watch “Why the Best Investors Ignore Silicon Valley” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from How I Invest With David Weisburd
-
Hunter Walk: Why Venture is Getting Harder, Picking Great Founders, and Investing Against Consensus -
True Anomaly’s Even Rogers on Space Warfare, China’s Military Advantage, and the Defense Tech Boom -
Finding the Next Anthropic, Quantifying Venture Capital, and the Science of Picking Winners -
Why 95% of AI Projects Fail, Anthropic still at $2T?, and Why AI Is Still in the First Inning -
Peter Thiel's 27-Year Partner on the AI Bubble, the Venture Capital Crisis, and the PayPal Mafia -
Why Venture Is Eating Public Markets, Picking Great VCs, and the AI Boom w/Brijesh Jeevarathnam
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.
