So then they hear about these old family office roles. Sounds so nice. Sounds cushy. You get to hang with some billionaire, you know, and you're at the box, at the sports teams, and you're just throwing out $25 million checks here. Like, it sounds really great and, and it can be, but there's also like a lot of negativities too.
Acquiring Minds
Family Offices for Searchers: A Primer
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Right? It's all, like, fun and good and you're like, doing that and it's flexible and you have to wear jeans and you're like, coming to the office only three days a week, and you still like, work hard and you're doing high octane private equity stuff, but it's just a more relaxed and underground environment. You're not speaking at conferences, you're not even going to conferences anymore.
You probably won't even wear a tie, like, for a long time. So it like sounds, it sounds great. And then like, you know, one day like the son in law comes in and he's like, never had a job before and his new job is to like, be in charge of half the asset pool.
A family member wants to start a goat farm, and all of a sudden like, all this work and mandate you've done and there's, there's, there's a huge divorce with the family members and then you're like, you know, there's a dispute over planes and you're like, wait a minute, my entire like, world kind of got blown up. Right. It can be a little more volatile. So that's a, a little bit of a perverse…
But I think those sort of touch on some crucial things. Like because it doesn't have the kind of tight aligned incentives of a private equity firm, a structure that has worked for many, many decades, it can have some downsides. Incentives are another thing.
If you're like, what, whatever, 30 years old and you're working for, you know, a family that has hundreds and hundreds of millions of dollars and maybe you're, you know, you're working for a CIO that's sort of in a cushy seat, like, that can be difficult as well, because you have, you know, incentives that are a little misaligned. Right. The family has already made their money.
They're trying to have fun and, and, and maintain, and they're, they're very focused on philanthropy. If you're like, look, I want to build and grow and I want to change the world and I want to do big things and do all that, like, that can be a little bit of a misalignment too.
I think if you're sitting at Blackstone, even when it's 20, $30 billion in size, obviously it's way, way bigger than that now, but even at that size where you're above scale, they're still all like, we are on a boat and we are razor focused and growing. Everyone is aggressive, everyone's incentive. Maybe incentives aren't purely aligned, but like, they're all kind of like, we're trying to get…
Even the rich are trying to get rich. And I think it, there can be some misalignment there. Sometimes in, in family offices, other things that happen is, you know, a small family office will, will pop up.
Let's say it's a couple hundred million dollars a year. And let's say for the first four or five years, you know, the principal is very committed to directs and independent sponsor deals and directs and search funds and, and you're having a great fun time. You're sort of doing all these deals.
Then all of a sudden the principal, you know, gets a little older and the principal's like, yeah, like I'm not really loving doing these directs anymore. Like, let's just start moving the portfolio over to, you know, ETFs and maybe we'll do a direct.
So all of a sudden you're the, the young CIO or, or senior vice president or principal or whatever and you're like, you know, I was brought in to really like take my private equity career the next, next level. I was doing directs and, and now I'm doing like one a year and like the check size is coming down so like my carried interest is coming down. Like that can change as well.
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