[REPLAY] Investing with Penny Pritzker & Building a Robust Venture & Growth Practice w/ Momei Qu, PSP Partners

Momei Qu:

I didn't come from the finance world initially. I was a computer engineer by training. And one of the earliest influences that I had was in college when I was building computers and I saw some of the world's best technologies were housed in the labs and unable to be commercialized, because they did not know, from a business angle, how to target customers, how to drive growth, how to drive revenue.

And so even when I was in school where I attended University of Illinois at Urban Champaign during my second year, I added a second major in finance. And I've made it my goal to make sure that the best technologies will get into the hands of users and de commercialized. For a few years in between, I spent a few years in healthcare it where this was probably even more important.

As you think about healthcare and saving patients' lives, you definitely want the best technologies and the best inventions to be commercialized. So that's kind of how my tech and finance world got together, which is in deep down I have a passion for technology.

Sarah Chen-Spellings:

Yeah. And if you think about your different chapters, right, and we wouldn't go into too much of it, but with Merrill Lynch, with BCG, what were some of your key takeaways? I mean, you know, these institutions are pretty large, and you had multiple clients, you had an eagle eye view. What did you take away from these different chapters?

Momei Qu:

Yeah. So my goal for being a part of the, a lot of these early institutions was exposure. And I think one of the reasons that I went into investment banking and not necessarily straight into engineering or a product role was, investment banking was one of the few careers where as a 22 year old, when arguably you might have no value add, you get to work on some of the most exciting deals, that are real, that touch people's lives, that are large and influential and consequential.

Sarah Chen-Spellings:

And what was unexpected about those different chapters for you?

Momei Qu:

Well, the first thing that was unexpected was I joined Merrill Lynch in 2008. So I was part of the last analyst class at Merrill Lynch.

And that was a very unexpected time because I was full of excitement. Graduating college, going to New York City, again, working at an iconic firm like Merrill Lynch, that was, I think 108 years old. And then the minute that we become the first-year analyst class, then we get acquired. So that was a mix of, I would say, yeah, definitely unexpected, but also disappointment because I really, I joined investment banking because I loved what I saw and I loved some of the mentors that I had early on.

Who had investment banking careers. But on the other hand, that was the reason that I went into venture capital, pretty soon after. And so 2008, early 2009, when the world looked like it was crumbling in the financial crisis, I reached out to really some other banks as a way of seeing what my backup options might be if Merrill Lynch didn't end up surviving.

And serendipitously cause life is funny that way. I talked to a smaller bank who, called SaaS Capital is a small bank here in Chicago. I said to the founding partner. Hey, I would still like to do the investment in banking, but we don't know what the future of Merrill Lynch is going to be.

And he said, you actually have a really interesting background of both engineering and the finance world. Would you like to explore a venture capital, as a different career path? Because I happen to be shutting my bank down, but I am launching a new venture fund where we get to work with founders and adventures, and I think you can have a great background for it.

Sarah Chen-Spellings:

And this is quite a common path, right? A lot of bankers, especially from the IBD, Investment Banking Division, actually go into venture. How did you find that transition? Was it difficult for you? Did it feel very natural?

Momei Qu:

It's not a uncommon path, I would say. It's not as common at such an early age because I did banking for about a year at Merrill Lynch before this opportunity presented itself.

And, I would say it was fascinating. The fund was at a stage where we were structured more like a merchant bank than a traditional fund where we were fundraising at the same time that we were providing some advisory services to entrepreneurs when they could become potential portfolio companies.

And so we dug deep into helping some of these founders launch businesses at the earlier stages. And these are inventor, deep-tech type of  businesses and founders. And so just to give a couple examples, we worked with one founder who invented reflective surfaces, like what you see on traffic signs and that can be applied to Microfluid and all the other things were micro structures might be applicable.

And my role as part of that was to help them build their business plans. A lot of them did not have, again, this is why I really moved to the venture capital business where some of the best technologies don't really have a way, were a well thought out process for commercialization.

And so for some of these companies, we took invoices. And I built a financial model out of them. And most of them I wrote 10 to 15 page business plans to help them think through strategy, but also eventually for capital raising if they need that capital. And so even though it was a venture fund, a lot of my work was around business building founders, using that lens.

And that was something that I fell in love with and never turned back from.

Sarah Chen-Spellings:

Do you think the skillset that you bring to the table as a venture investor is that, being able to see both on the balance, as you said, right? From an engineering point of view?

Momei Qu:

Yeah, I think that definitely helped my perspectives around. People that are building the products and looking at the science, as well as looking at things from a business model. That's a cool technology, but does it actually make money and on what timeframe?

And I think I benefited from lots of deferring perspectives from a young age, and that translated into my career even now. And so maybe rewinding a little bit. So my parents were filmmakers. So I was born in Beijing, China. And our family immigrated to Oregon when I was nine years old. But my parents in a prior life made films.

My dad was a Cinematographer. And then my mom did sound recording. I took an early interest in computers and science, and I was also doing sports. And so I kind of, I would say sports arts because of my parents as well as technology were big pillars of my life from a early age, but they were all very different.

And all three opportunities came proactively to me. I wasn't really looking for a new job at the time, but they fit my career at each inflection point. And so, when Baird reached out, it was during a very prolific time in their fund where, so I did 13 deals in two years.

And back to the exposure topic that we talked about earlier. I thought it was really important for me at a earlier stage in my career, just to have as much exposure to deals as possible. So the fact that I saw that Baird had a lot of deal flow was really interesting. I also got hired as the first associate working across, uh, four partners across two different sectors.

And so transition wise, it was pretty easy. Because when we're looking at the same things in terms of founders product traction, funding but it definitely developed more of my muscle in terms of just looking at a bunch of… VCs all about pattern recognition, right? So seeing a lot of patterns, seeing a lot of successes as well as failures and shaping my investment views accordingly.

That was one of my big takeaways from Baird. And then PSP was also at an interesting time. So the quick background of how PSP World started was, it's a really great story. So PSP is Penny Pritzker's private investment group.

Penny Pritzker, as you and others may know, very successful entrepreneur, businesswoman, leader, philanthropist, and so first of all, it was the opportunity to work for someone that inspiring. That was sort of number one but the second piece is she was building something from the beginning, so it was almost like for all my time working with entrepreneurs, there was an opportunity to build something within PSP. And that was really exciting to me.

So the Pritzker family, their roots are in real estate and industrials. So probably most well-known for the founding of Hyatt Hotels and Marlon Group, but lots, dozens of businesses over several decades within that.

And then Penny became Secretary of Commerce under President Obama. And during that role, she looked at a ton of digitization initiatives across different industries, liaisoning with all the Fortune 500 CEOs. And coming out of that, she's always had a passion for technology entrepreneurship, but really dove in two feet in, in terms of technology is really important for the backbone of our country, driving our workforce, driving job creation.

So the fact that she wanted to go all in to make technology a big part of PSP and the opportunity to join her at the beginning of that was just something that I didn't think I could pass up.

Sarah Chen-Spellings:

I love that. And I wanna go a couple ways here. I mean, you know, Penny is of course a trailblazer in many ways.

In fact, I was just tuning into one of the stories where she related about her late father passing away quite suddenly at the age of 39 from a heart attack and she was 13. And in fact had a very close relationship with a grandfather who in the beginning did not involve her in the business.

But she had requested, to her grandfather in green stationary, Hey grandfather, why is it that, you don't involve me in the business? You know, I really wanna learn more about this. And of course, they were known for the Hyatt Hotels, and this was her purview after her father passed.

In many ways, she's a trailblazer in truly male dominated industries. What is it like working with her from the early days in building something?

Momei Qu:

It's really amazing to work from for someone like Penny. the story that you reference, I love that story. For many reasons. I think one is being a trailblazer, like you mentioned, is just very rare, right?

I think if you remembered her grandfather's response was, how am I supposed to know that girls want to do business? Which is very real these days, I feel like a lot of us talk about self-advocacy.

Many years ago, people didn't really talk about that, but that's kind of her first example of self-advocacy, right? If you don't ask for something, you might not get it. You may know this too, but she also co-founded many companies back when there was not a lot of women founders.

And they've all become big successes. but that was all stuff that I sort of knew before joining. That's what attracted me to PSP. I would say working with her on a daily basis, I am just always shocked at how grounded she is because of all her success.

So she's very down to earth and also her work ethic. For everything she's accomplished, she's still. I think her day is back-to-back 30 minute meetings and  super involved in all of our companies and we have a lot of them. And I'm pretty sure the first conversation I had with her each morning; she probably already ran 10 miles.

And so just like the pursuit of excellence in all areas of her life, even after achieving the success that she already did. One of my main things is I need to be working with inspirational people.

Sarah Chen-Spellings:

You knew coming in that you were dealing with an overachiever.

And this was also during an interesting time, and she's spoken publicly about this, when the Pritzker family, who are very well known in America, were sort of deciding to divide their assets, figure things out and all that, and she was probably trying to also build her own identity with PSP. What was unexpected in all of that?

Momei Qu:

Yeah. You are right. so maybe before going to the unexpected piece, that was one of the things that attracted me to this opportunity is it's a new chapter within PSP and for her too. And to just be able to play a role at that inflection point, it was just something that was really, really exciting.

So what was unexpected? So PSP, we have strategies beyond venture capital. So first, we have a real estate team that invests in multi-family and industrial properties. Sort of a continuation of all the real estate activities that her and her family has done over the years.

We also have a private equity group that invests in more mature buyout type transactions. And we also have a funds and partnerships team that invests in other managers of funds. And so, Venture was coming in as the new piece of the strategy. And I heard some cautionary tales when I came in, in terms of, hey, if you look at corporate venture right, there's a lot of cautionary tales around that.

When you have the oversight of a parent company and things are slower, things don't really get done, you can't really drive your own agenda. I've heard conversations on, there's been other growth where venture strategy started within private equity, and it never works because it's a different type of mentality, different type of business.

And lastly, on the LP side, once you become a LP of a fund, then you don't really get the correct deal flow. So there's a lot of stereotypes. And again, cautionary tales about building something so transformative and risky within a more traditional organization.

And I came in thinking I had to defend my ideas, defend my strategy, and really build my own identity.

And in some cases I did, but I've been pleasantly surprised, the unexpected piece of how collaborative everyone has been, and how much better it has been to unlock the power of the whole platform.

And yes, while I occasionally have to answer the question of why are your companies valued at 15x revenue?

And we're trying to fight four companies valued at 15x EBIT. The majority of the time it's been very collaborative, very additive. Just to give a couple examples, our real estate team can sometimes be a customer of the real estate technology companies that we invest in. So it's an added strategic angle.

Our private equity team I learned from all the time in terms of how do you professionalize sales professionalize operations, professionalize your go-to market in terms of if you wanna go to do inorganic growth? I share those insights to my CEOs all the time on the venture side.

And then our part funds and partnerships team we're talking to a lot of the same VC partners, um, because they're in the same ecosystem and they're good sources of deal flow for us. And so we collaborate on them all the time in terms of, here are all the things we can partner with you, we can be a fund investor in your group. We can also invest alongside your portfolio companies. We can also lead new rounds for your portfolio companies.

And so that's been a very pleasant surprise in terms of how well the group has worked together, when the strategies are so different, and people's back backgrounds are so different.

Sarah Chen-Spellings:

Yeah. Love it.

For the purpose of our audience here who may not be as familiar, when you think about sort of the assets under management is the primary, sort of driver of the group still in real estate or how big is venture as a part of that?

And how do all the different entities work together?

Momei Qu:

Yeah, so we all talk to each other all the time. And as a larger group, a subset of us would meet a couple times a week.

And this is across the whole platform, everyone from Penny, the leadership, venture, PE, real estate, funds and partnerships team. This is our way of really stepping back from the shoes of our individual siloed investment strategies and thinking of what are some of the macro implications, what are some of the drivers within real estate. For example, return to office workforce that we should be aware of, what are other funds doing that we may be able to learn from.

And so we do that multiple times a week, and that's one of our differentiators when we talk to founders is there's a lot of great specific VC investors or PE investors or fund investors, but not a lot of groups that has vantage points across all the different asset classes as well as from a macro side.

From a allocation perspective, all the investments come from the same balance sheet. And so while each group has rough benchmarks around check sizes, so for example, our private equity group tends to write $100 to $300 million checks per investment.

And on the venture side is anywhere from, I would say $5 to $35 million. Those are just guidelines. Um, and that's one of the beauties of working at a non-traditional fund, which is in a year, if we see 10 opportunities we're excited about, then we can do all 10. If in a year we see no opportunities, then we don't really have the pressure of having to deploy capital. It's one group of capital and may the best opportunities win. Wow.

Sarah Chen-Spellings:

Wow. And remind me again because, from the outside, I think it seems very institutionalized, right? And professional, the way that it's run beyond a typical family office in some ways. Is there external LP capital or is it all the family money?

Momei Qu:

Yes, this is all the family's money. All of Penny's money.

Sarah Chen-Spellings:

All of Penny's money. I love it. I love it. we talked a little bit about this, you know, in terms of looking at macro conditions and balancing that out.

Actually I just spent some time with a couple of family offices in Texas, and when I look at a lot of their allocations, a lot of it is pretty high weighted at real estate, which is deemed to be more stable in some way. How are you seeing, you know, Penny and the firm, I guess, prioritizing between these asset classes?

Momei Qu:

Yeah. It's a difficult question and we have that conversation all the time. Well, we definitely each have to answer the question of if your particular asset class, so I'll be the first to say that venture is a bit challenged lately. We can get into that and so I have to, you know, defend why venture, first of all is a good asset class before talking about a specific opportunity.

For now, I think we like the diversification and we think there are pockets of opportunity within each asset class. So within real estate, within private equity, within funds, and within venture that are investible. So there's not a lot of discussions around that, but I would say in each category there's, you know, forces that are tailwinds and are forces that are headwinds.

So real estate generally, I think it's cash flowing. It's a stable asset class, but there's challenges in rising interest rates. So that's on the consumer mortgage side, there's challenges on the commercial real estate side, given that we don't really know what office occupancy is gonna come back to.

I think we see a trending in the right way, but we don't know where it's gonna end up. And on the venture side too, the bid ask is pretty wide in terms of, there's some great businesses out there where the valuation might just be not quite adjusted and we just have to be patient.

But there are other opportunities when, for example, the company is starting out, they're young, and the cost of capital is more expensive now. Which means they need to spend less money on things that don't quite have the ROI. And arguably talent is cheaper now than it was back in 2021.

So I would say in each of these asset classes, you have the pros and cons and we just have to be good investors and weigh all of them as we think about investments.

Sarah Chen-Spellings:

Yeah. So let's get into venture. You've built the practice over the last five years and counting right? Five years in a couple of months.

How have things changed? I mean, the markets are not in a good shape right now especially at the stage that you're investing in, where it's north of 50% that has been slashed.

Are you timing the market at all? How are you thinking about investing this year compared to the high of the last two years?

Momei Qu:

Yeah, it's definitely an interesting time, and I would say in general, we think this is a good thing that's happening to the industry. We think there's just been, I would say back in 2020, 2021, there was just a bunch of me-too software companies that we really couldn't tell the difference between that business and a business that we just saw last week.

But somehow, They have 5 million of revenue and getting valued at like $500 million. So compared to that environment, I think we like the current one much better. In some ways I think it's been helpful in the last couple of years where we did have the checks and balances with from our real estate team and from our power equity team, when, if your P&L, your cash flow are too outta whack compared to what you should be valued, then they'll be the first to say it versus if we had a traditional venture group that's seen ventures things all the time.

So I think compared to some other funds where our portfolio is in a relatively okay shape, we'll have some companies that are probably overvalued that we're managing. But generally I think our portfolio's okay.

As we think about new opportunities, I would say the bar is definitely higher. We are thankful that we don't have to say yes or no to a three day diligence process anymore without much data. So we're taking our time, we're being patient, but we think for the right companies, again, this is a really great time to invest because valuations are arguably lower for new opportunities.

Cost of talent is arguably cheaper. And if you can show strong growth in this environment, that means you're getting corporate budgets at a time when corporate budgets are tightening. So if we look at a company that doubled from last year to this year, we'll probably give it more weight than a company that doubled from 2020 to 2021.

Because cost of capital is free then people were just throwing money and innovation. So in some ways today it's easier to tell who the winners are from the losers. But we're definitely still active in trying to find as many winners as we can.

Sarah Chen-Spellings:

Yeah. So what is going to differentiate for you? I mean, based on what you're seeing on the market now between the haves and the have nots?

Momei Qu:

So I would say, definitely ROI. What are you delivering to a customer that has clearer path to either savings or efficiency or something transformative. So we look at our investments in terms of, you know, I would say vertical software, horizontal software, and kind of game changing transformative technology.

And I think for each of those categories, we still see pockets when things are offline, manual, lack transparency. So there are solutions that have a place to exist. And when we see that and you know, revenue doesn't lie. So when you see revenue kind of go hand in hand with a solution that we feel like is missing and much needed and solves a clear problem, I think they will still have a place in this world to exist.

Sarah Chen-Spellings:

And what was your thesis? And has it changed, I guess, when you started? You know, I think the approach was very much B2B SaaS, right? So horizontal, looking across, and you've even made investment recently into Adept that we wanna go into. But when you were thinking about B2B as a space and enterprise SaaS, how are you thinking about, where the market was moving and why you were bullish about it?

Momei Qu:

Yeah, so we, yes, we still have a focus on B2B SaaS and the reason we chose that as a focus is, as you heard, Penny and PSP, we have lots of relationships and strong networks across many areas of the economy. That we want to be able to unlock, use, and we call, you know, supercharge a company's network and amplify the relationships that they already have.

And so we didn't wanna target a specific sector, because our relationships are in many different sectors. But at the same time, we needed to have a focus to say, how do we then tell what best in class businesses are? And so having that business model focus was our way of being able to reach, uh, our tentacles into many areas that we feel like innovation should be had, but also be focused in know what best businesses look like.

And I would say that hasn't really changed too much. So we're still looking for things, for example in vertical software mainly in old line industries that can still improve from efficiencies and workflow.

So we have a couple, say in the real estate side, that matches well with our history. VTS is a company on the leasing, asset management, tenant workflow side, open space construction technology. You can automate progress tracking and see what it's built and what's not. Guide wheel, which gives you like a real time digital footprint of all your machinery and how they're performing.

And so just to give you a flavor of that. And then horizontal software, is things like, a web company called Icertis. They're in the contract management space. Enable, they're in the B2B deals, contract space. And so that kind of apply to all companies, but the similar thing is things that were traditional and offline and bringing them online.

And then Adept, as you mentioned, is a new AI company that we invested in that falls within the transformative technology space that we feel like, you know, still has a lot of room to grow and run and maybe a little different than how we think of vertical and horizontal software. This is more game changing technologies has changed the way we interact with, with software and, and workflows.

Sarah Chen-Spellings:

When you look across, and we're looking at SaaS specifically, was there any specific patterns?

I mean, we talk about pattern recognition within these different companies operating in a SaaS environment and B2B, uh, that really makes them successful.

Momei Qu:

Occasionally this will happen, but we rarely see companies that sort of couldn't find product market fit for many years and all of a sudden takes off. So early momentum is a big area that we track. So for a company's, you know, under $10 million of revenue for sure, but even I guess up to $25, if they're not at least doubling each year, we view that as a sign that something is maybe not quite right in terms of product market fit and those can be hard to recover from.

And so we're very much momentum investors in that we try to make a company that's growing well grow even faster. And so seeing that repeatability of revenue and seeing if they can continue to expand wall share within one customer, is also an important driver of stickiness and retention. And so from those metrics that we can usually find the best in class businesses.

Sarah Chen-Spellings:

How have you seen companies build virality across B2B sets? I mean, that's one of the big key metrics that we all look at, right? You know, the stickiness. Are they growing a wallet share? Is there virality in the user base, especially when they're addressing an ecosystem?

What were some of your, I guess, highlights of how businesses have figured this out that you were impressed by?

Momei Qu:

I think a big part of it is ease of use. So many times in B2B software, the onboarding process with the sales cycle can be a lot harder or not longer than, versus a consumer business, right?

When virality is much easier to, or at least much faster to achieve. And so we love looking at technologies of, I would describe it as a very intuitive and straightforward user interface but a very complex backend. If something is hard to use and people are hard to figure out, one is hard for your investors to figure out too.

So I think, from a fundraising perspective, that's also harder. But from a customer's perspective, if they can't see it, touch it and then be able to use it and see value from it immediately, then you have a uphill battle. At the same time, if your workflow is too simple and it's much easier for someone else to copy it.

There's limited barriers to entry. You have a different set of problems. You might have the viral nature, but someone else can have it too. So we really look for that combination of things that are intuitive, but complex backend. I think our company open space is a good illustration of this where, I mean, capturing progress.

On a construction site in the real world is pretty difficult, and so for them to be able to have you either use a camera, attach it to your hard hat or put it anywhere where you can just continue to do your job as you normally would, but all this is passively captured in the background and up upload it for you was a big piece of how they grew so quickly is because it's so easy to use.

Sarah Chen-Spellings:

Speaking of complexity, yet, ease of views, of course there's no conversation without a mention of ChatGPT and you just invested into Adept. It's just been a couple of days since the testimony of Sam Altman, you know, here in DC. What are your thoughts here on, B2B SaaS applications of AI?

Is this a good or bad thing? Are we over our skis at this time?

Momei Qu:

It's the billion dollar question, right? I would say, you know, first of all, um, I'm really happy that Sam Altman is testifying and it's a very important conversation for all of us to have.

I think AI will be transformative. I think it's been compared to the invention of PC, internet, mobile, cloud, and maybe even surpassing that. There's a lot of good things that could be done with it, especially on the productivity front. And we're certainly seeing that with our investment in Adept where they're automating much of how you engage with software.

At the same time, like with any technology this powerful you need to have responsible AI, where you need to have regulation, where you need to have some guidelines around so it doesn't go into the negative territory. And I think we're all trying to figure out what that is. I don't think anyone has answers to those questions, but I think sort of at very basic level like AI should.

Inventions in AI should protect privacy. It should be safe, it should be accurate, it should not discriminate, right? You have these basic principles for our society, that should be there.

Who does it? I think it's more than government and that plays a role. I think it's all of our companies, it's our founders, it's our civic organizations. Everyone should play a role in how these guidelines are formed, and I think we'll see how that be formed. But I think having a conversation first and foremost is the most important. I don't think, you know, we're at the place where tomorrow robots are gonna take over the world.

But I do think, and this is what, you know, Sam also said in his testimony is, the scariest thing for me for AI is in the immediate term is misinformation. So where you saw some of the challenges with fake news and people not knowing what to believe and what to read. And if you think about, if AI can now generate a real high quality believable image of you or me saying things that we didn't say, like those implications I think are very scary and very much on our doorstep as opposed to, you know, who knows when robots will actually be here.

Sarah Chen-Spellings:

Yeah. So what made you say yes to Adept?

Momei Qu:

For one, if we stay on this topic of regulation, they're solving a business productivity issue. So think of them as automating what we do in software. So as opposed to logging a particular contact in Salesforce, you just type in a box, please lock this contact, and they'll know exactly which fields how to log in and click.

You can also think of it as type in submit expense report, and so it kind of pulls all the data from your expenses and submits it. So compared to fake news, right, it's, it's a little bit safer. And at the same time, it can really increase your productivity, I'm sure there are some downsides to every solution, but Adept was one that we felt like it was transformative enough on the business and productivity case without sort of having an immediate detriment on our consumer day to day.

Sarah Chen-Spellings:

Yeah. So if I may dig a little bit deeper here before we go to billion dollar questions. We talked about this beginning of this interview about how important it is to look at the founder, right? And especially in, in the realms that you're working with Adept as an example.

Okay. They're submitting expense reports and probably pulling that data from your email, right? So I've seen different versions of this, but they are calling through potentially personal information, very private stuff that then, they have access to. So it's up to the founder to think about, what are the limits here?

What are the ethics here? When you think about, as an investor, investing into founders tackling sort of the unknown unknowns and ethics and all these things, what makes you confident in this founder that yes, this person, when faced with difficult situations will be able to make the right decision?

Momei Qu:

Yeah. I mean a lot of it comes from asking them about their values and their philosophies, and for founders that are conscious of the topic of ethics and how do you invent responsibly. Even if they might not have all the answers yet, the fact that they have intention to figure it out, to hire team members that help them figure it out, to be aware of it is, is step one.

A lot of people it's not necessarily top of mind for them, and you can tell in the conversations that you have. And then the other thing is the founding team that came from OpenAI. And so they were sort of at the forefront of a lot of this AI innovation. And so to have that perspective, to have the team, to have the resources that are living and breathing these AI topics, gives us some comfort that at least they are knowledgeable and aware of the different dimensions, if you will, of the pros and cons of AI. And then they can make, drive them to make a better decision.

But you can never, I guess, a hundred percent be sure. So you do your best to make a judgment call.

Sarah Chen-Spellings:

Yeah. And so this actually points to questions that you as an investor ask in diligence, right?

What have you learned to be very important questions like non-negotiable questions an investor has to ask before a deal is done.

Momei Qu:

So we're very data driven investors, and so we ask for data in all shapes and forms and we verify them. And even for earlier stage companies that don't have a lot of data, we're pretty strict on that front.

And I think, again, that's probably part of our real estate PE DNA too. And so we are not the type of investors that just back an idea after one conversation. So, from that point, we've always been really diligent, and it's not necessarily like this is one piece of specific information that makes or breaks a deal, but it's really how a founder communicates and shares information that's really important.

We've had conversations where from the first, with the second conversation, they're an open book in terms of what do you want to see, what do you want to know? We understand. Your capital is valuable. We need to be good stores of capital. So whatever you need, we're going to get you. And usually those founders after we make the investment are much better about transparency, about sending regular investor updates, being available whenever we need updates.

On the flip side, we definitely had conversations where within 10 minutes of a conversation, the founder goes we're oversubscribed. So either you're in or you're out. And for all those we've said, we're out.

And what we've heard is that even if somehow you get comfortable with the investment going forward, anytime you want information, anytime you want to share an update, it's like pulling teeth. So it's less about, like, one piece of information we must have is more just how their philosophy and their demeanor of sharing information.

Sarah Chen-Spellings:

Very fascinating. Well, so many questions, Momi, that I could, you know, continue on with you. But we are time limited here, so this is the fun part. Billion dollar questions. Okay. Quick fire questions. First thing that comes to mind. Your a guilty pleasure.

Momei Qu:

Ooh, I have a lot of 'em. I would say, uh, drinking champagne in an airport lounge, which I know sounds absolutely odd. But I think we are so back to back in all of our days, having downtime is hard to come by.

The beauty of waiting at a airport lounge before your flight is no one expects you to be productive during that time is really, it's much. It's like easily wasted time, but instead it creates a space that I need to unwind and actually generate creative thoughts. So many of my best ideas came from airport lounges.

Sarah Chen-Spellings:

I love the airport lounge and yes, that is a habit that I like. A habit that you've picked up other than champagne at the airport lounge that has changed your life for the better.

Momei Qu:

I'm not sure how applicable this is to the wider audience, so I'm a morning person and my most productive times is when I first wake up and it kind of deteriorates during the day.

And so I've learned to sleep in chunks. So it's a little less actionable when I'm, you know, working. But if I can sleep in three hour chunks and then wake up and have another productive session and then take another, I guess power, power nap, if you will, three to four hours and I wake up again.

I get doses of energy every time I wake up. Um, so that's my way of unlocking productivity. If it does work with my schedule. It has also helped that I have two young children and, you know, lots of sleepless nights, lots of waking up, but that actually gives me the power and that, that I need to then wake up and be productive.

Sarah Chen-Spellings:

What would you tell your younger self?

Momei Qu:

Well, the first thing I would tell my younger self is to put all my savings into the 12-year bull market that we had for stocks. That if I could turn back time, I would tell myself that. But then I would say also that, you know, learn how to communicate at an early age.

It's one of those soft skills that's hard to teach and hard to learn, but it's important in all areas of life, whether that's your professional life when you're trying to drive one of your agendas or try to be influential or your personal life when there's just a lot of moving pieces?

I think having great verbal and written communication can be the best thing that you train yourself to do at a young age.

Sarah Chen-Spellings:

What's your biggest insecurity?

Momei Qu:

My kids. I've always had this mentality of playing to win, not play to lose, act like you have nothing to lose and you can take a lot of risks and be bold, but with kids you have a lot to lose. Having kids is scary.

There are little versions of you running around and I'm always worried, are they safe? Are they happy? Are they being bullied? How are they gonna grow up? Am I being a good mother?

So, yeah, all, all the insecurities that I never had in the first phase of life all came out when I had my kids.

Sarah Chen-Spellings:

And that brings me to a really good question from the previous episode, Martina Woff. For you, how do you decide on the boundaries of your sacrifices?

Momei Qu:

So I think the one pitfall that I would advise others and as well as myself is don't try to measure yourself on a daily basis. So, so many times I see mothers or other others that are juggling a bunch of things together. Where they're like, hey, every day I have to set aside time for my kids, my work, my friends, my family, and they just get really overwhelmed.

So I've learned to be okay with sprints where, hey, maybe for a week I'm trying to close the deal and it's okay if I need to have a family, take care of my kids for almost that entire week.

And then there are other times when say the deal is closed and portfolio's in a good shape, then. I devote all my time to my family, whether that's a vacation or whether that's a center, not time. So being okay with, not necessarily need to be everything to everyone all the time, but being okay with being all in on whatever's most important, and most pressing at the time, I think has been something that's been really helpful.

Sarah Chen-Spellings:

Yeah, love that. And finally, my next guest after you would be Jeff, who is the CEO of Coursera.

What question would you have for him? He’s got a great background with Financial engines, right? With a Nobel Prize winner. What question would you have for him? Billion dollar question.

Momei Qu:

Billion dollar question. If you weren't in the career that you are at today, what's a dream job that you had as a kid? Or what else would you be doing?

Sarah Chen-Spellings:

Love that. Well, Momei, thank you so much for your time. This was excellent. I will be sure to put that question to Jeff and send it to you. I'm excited to hear what he says as well.

Momei Qu:

I'm excited as well. Thank you for having me. Oh, this has been a lot of fun.

And yeah, really appreciate it and really honored too to be a guest on this show cause I've seen what incredible people have been on here before.

Sarah Chen-Spellings:

Thank you, Momei. Well, I'm excited to keep seeing your billion dollar moves.