Tyler, thanks so much for doing this.

>> Yeah, appreciate you having me.

>> You're building Riptide, [clears throat]

a new multi-manager fund at a time when

many small funds are closing.

What's been the story in getting to this

point?

>> Well, you almost just hit the nail on

the head. Um I think in the current

environment the ability to be a smaller

fund single manager has probably been

never been more difficult. Uh you're

seeing a lot of capital being

accumulated in multi-managers

uh especially the best multi-managers

and that's for good reason and the truth

is is that the multi managers have

produced extraordinary riskadjusted

returns over a long period of time. I

citadel's been doing it for 30 plus

years. Most people don't realize that.

Um, so in today's environment,

allocators are asking more and more

about the volatility of the strategies

they're invested in. Uh, the divers

diversification

of the managers within those strategies

and I think in many ways are telling the

market that their preference is to have

well-managed high-risisk adjusted

returns relative to high volatility high

returns. you know sharp ratio is now

becoming a very common word uh for most

allocators.

So uh and we will delve into this

deeper. Um in many ways Riptide is

designed to allow smaller managers and

emerging managers uh and established

managers because I I tend to shy away

from the word emerging. A lot of these

people have been doing it for decades.

They just haven't been discovered yet.

um a way to access capital in a way that

is um

most practical for allocators.

So I always give this example that if 10

small funds were to step up and ask an

allocator for $10 million each, the

likelihood that they get an allocation

is probably quite small. You know, I met

a fund the other day that had talked to

46 potential investors and they got

three call backs and zero subscriptions.

And that tail is as old as time when

you're emerging and trying to get your

strategy off the off the ground. Now, if

you flip that script and say, well, what

if I were to find 10 of the best

managers I could possibly think of,

aggregate them in a multistrat type

structure, allocate them all at $10

million, risk manage in a way where it

is a well-edged, you know, high sharp

type product. I think our ability to

raise $100 million and get $10 million

to each of those managers is more

probable than those 10 managers pursuing

$10 million checks a piece.

Walk me through what Riptide is. So you

talked a little bit about the problem

that you're sort of trying to solve.

These emerging managers, exceptional

people, but the tale of them trying to

access say a $10 million check and not

being able to access that is

is as old as time. You know, it's it's

very hard for them to access this

capital. What is Riptide? What are you

specifically trying to do?

>> Riptide is a platform. I always say it's

a two-sided marketplace in a way. We're

really trying to be the epicenter of

undiscovered talent and capital um with

a baseline of value ad services that I

think um punches well above its weight

to be honest with you. So we just

touched on it. I think there's a lot of

inefficiencies in the market in capital

finding emerging talent. you know, the

the managers we often uh converse with

are not on the JP Morgan private wealth

platform. You know, that's a you know,

an echelon that they aspire to. But the

truth is is that if you're running $25

million in AUM, um a lot of people just

pass over your strategy. So, we sit

there and and we take two sides of the

platform and we try to service it as

best as we can. So, let's start on the

talent side, on the manager side. Um, I

come from a portfolio manager

background. You know, I've been a

portfolio manager for 17 years. I've run

a whole gamut of strategies. The the

first strategy I worked on was a short

only regional bank strategy in August of

2008, which uh I always jokingly say

they they missed our chapter in the big

short, but we deserved [laughter] one.

Um, and that was a great experience. Um,

uh, Brad Golding, Mickey Shami. The firm

was run by a guy named Richard Rob,

still is tremendously successful

University of Chicago, uh, academic, you

know, just tremendous IQ in the room to

be honest with you. But it immediately

exposed me to the short side of the

trade and the realization that, you

know, you know, markets matter, macro

matters. Um, and you know, in a bare

market, you uh you don't need analysts

and you don't need stocks um because

it's all going down anyway. Um so did

that for years. Did a lone pine seedated

tiger style type long short fund um that

ran uh capital out of New York into

Asian markets. Uh did US long short did

a uh global small midcap fund that was

the best performing fund in its

category. Um, so I'll give you that

abbreviated background by saying my

whole career on the investment side has

been finding undiscovered stocks. Um,

which I've had success with. You know,

it's a true passion of mine. I'm just a

big believer in semi-efficient markets.

You know, often there is alpha in the

world. It's just a question of how hard

you work and where you find it. We're

taking that same ethos into Riptide and

we're taking it instead of stocks uh

replace it with talent with managers.

You know, the truth is is that I think

there's a unbelievable

breath of talent in the world. There's a

statistic that I think 4500 funds run

less than $5 million of aum.

Um a lot of it's their own personal

capital. It's family. It's friends. But

what it proves to me is the ambition of

those managers and what they want to do.

So the whole idea of Riptide on the

talent side is how do we take you from

undiscovered to discovered? So the

example I always use is if you're

running $2 million in interactive

brokers today and you're generating a

track record, that's great. But the

truth is is that real capital allocators

are probably going to put an asterct on

that performance. They want to see it in

an institutional environment. They want

to see it in in an environment where

they have the comfort to go allocate

into. So we try to as a starting point

give portfolio managers that

environment. We invest in technology. We

use Arcana as a risk management system

which was built by next Viking Xitadel

portfolio manager. Um we have myself and

um other talent on the platform that's

got decades of experience in investment

management and we're all there as coach

and mentors. So we're trying to build

this institutional-grade

vibrant platform that allows emerging

talent to then thrive and be successful.

So that's the starting point for any

young manager in this world who's

looking to get their strategy off the

ground and running. But then there's

another element to it um which I I think

deserves kind of an extra emphasis which

is you build this platform and you build

these capabilities internally that's

going to allow people to be successful

and that isn't exclusively for emerging

talent. It's for established talent as

well because the truth is is that

there's a lot of talented managers who

are running capital in institutional

environments today that

don't get the full benefit of the

capital that they're managing. And it's

actually interesting. There's an article

today uh Ray Dalio made some comments.

you you may have seen it um where we

talked about the large multi-managers

and how you're not building a 50-year

business by being there.

>> And there's some truth to that. You

know, you're getting uh very high

payouts uh in terms of dollars. Um

you're running big, you know, swaths of

capital and that's all good and you

know, very very um potentially

lucrative,

but often you're not building a track

record that's portable. You're not

building your own business. You don't

have something that you get, I always

say, an annuity on your success.

>> And the way that fund management used to

work traditionally is you'd start your

fund. You would work extremely hard for

the first three years. You would

generate a track record. You would earn

the trust of the market. They would

invest directly into your strategy. And

even if the returns in year 5 to 10

weren't quite what the returns were in

year 0 to five, that was okay because,

you know, if you were still putting up

positive returns, you were riskmanaging

to the downside, you were a trusted

source, um, a trusted hands for capital

really. And the truth is is that if you

did that, you did it at a sufficient

scale, you were running half a billion

dollars, then you got a management fee

on that. And that was your annuity. It's

like you earned yourself a right to put

up good riskadjusted returns, build a

business that you could hand down to

your kids. And Ry kind of hit that nail

on the head today, which was that's

going that's becoming less and less as

multi-managers proliferate and there's

more internal managers that are just in

a pod or running a book or things like

that. So, a value proposition that

Riptide has is the ability for managers

to go and build their business, own

their track record, build a brand,

get exposure to capital. And if you're

successful here, you have that

alternative path where you could have

your own fund. You could diversify your

capital structure. You could have an

annuity on your success which and you

could do that in an institutional

environment. And that path back to what

we talked about in the first instance of

smaller funds that you know are

struggling in today's world is a

difficult path to blaze but ultimately

the most fruitful path that you can

follow. So what we want to be is very

helpful for the emerging talent. So you

have uh I wouldn't say unproven but you

have less proven and and mostly

undiscovered.

And then you have a path for

very proven talent, established managers

that are looking to at least create

optionality in what they do next because

the idea of going from one institutional

multi-manager to another may be less

enticing for them. So they're sitting

there saying, "Give me a path to an

independent fund and I will take it."

Out of everything you've said, the part

that intrigues me the most is the talent

side. Um, attracting the talent, getting

people who can perform to run money um,

under the Riptide platform.

How are, I guess,

how are you going about sourcing that

talent,

>> doing podcasts like this? [laughter] Um,

no, there's a there's a truth to that

cuz um, we'll take equal sides of that.

Uh, well, multiple different avenues.

>> Yeah.

>> Um, one is we're talking to younger

talent.

>> And there is some truth in that that,

you know, we're big believers that we

want to get our message out there. We

want to get our message out there in an

appropriate way because a lot of the

younger talent accesses information

through channels like this

>> which is which is amazing because I

think you get a a unfiltered

um conversation with a lot of breath to

it that uh for argument's sake is harder

to capture in a thousand words in an

article.

>> Yeah.

>> Um which is great. I think that's a

great service to all parties. Um, so we

want to be a thought leader in the

space. We want to really get our our

passion and our ethos out there in the

marketplace. Um, because the everyone

internally truly believes that, you

know, we're we're a purpose-led

organization and we're trying to create

as much optionality for talented people

as possible in a world that's full of

golden handcuffs and clawbacks and

lockups and things like that. Um, and

then we want to really generate

the highest performance possible. And I

could put it that simply, the truth is

is we're big believers that the talent

that comes here should be in an

environment that they're aligned in what

they're doing. They're motivated because

they know that they're trying to build a

track record that's going to be

portable. it's going to be their own. It

can lead to their own business.

>> You know, we're big believers that if

you catch managers at the right point of

that alpha curve, we call it the optimal

point of the alpha curve.

>> That statistics show that uh managers in

their first three years outperform the

hedge fund index by eight points.

>> You know, on average, you know, there's

a little bit of a survivor bias in that.

um but uh that they could do mid- teens

returns because they're right at that

point where they're the hungriest and

they're willing to work 100 hours a week

u and do whatever it takes to generate

performance and they're incentivized to

do so. So we sit there and say if we can

harness that get people in the right

environment get them focused on

investing and that's a big deal as well.

So just to backtrack a bit, one of the

detriments of launching your own fund is

the time it takes to operate the fund,

the time it takes to do business

development around the fund. So uh

statistics show that um managers that

are starting their own fund typically

spend anywhere between 40 and 60% of

their time on non-alpha generation

generating activities. you have to do

prime brokerage relationships, trading,

operations,

uh trade reconciliation,

uh compliance, um which is a nightmare

for everyone. Um and um and so you spend

all your time doing all of those types

of activities and actually takes you

away from investing.

Um and investing is what's going to

allow you to acrew your track record.

So we as a partner at Riptide do all

those operations for you. So if you kind

of you step back and step back into the

the conversation, all of a sudden if

you're at Riptide, you've got an

environment where the non-alpha portions

of your workflow are outsourced to us.

You get to focus only on investing. You

get to own the track record from

investments. Um which you now have a lot

more bandwidth to do. um we have capital

sources along the spectrum that allow

you to be successful and to earn into

capital pools. Whereas if you're doing

it elsewhere, you might acrew a great

three-year track record and and honestly

come up dry in terms of capital

conversations. The more that we

emphasize that message, I honestly think

that Rip Tide's biggest marketing

channel is going to be word of mouth. So

if we're true to our purpose and we

generate success stories, that's what's

going to bring talent in the door.

Importantly, back to my point about

returns. If the talent produces within

the funds that we have on our platform

and the risk adjusted returns are there,

that will bring capital into the door

and then capital will bring more talent

into the door and then more talent will

come in the door. It'll generate great

returns. It'll bring more capital in the

door. So we're not reinventing the wheel

there. You know, every great

multi-manager has gone through these

iterations where they started maybe they

didn't have the the a team of the talent

pool. Um they built a great process in a

system, they graduated up, they built

the system even better, they had more

talent, they gathered more capital.

We're going to go through that cycle. Um

but what's important for us is an

emphasis on the opportunities we're

going to give people. the emphasis on

the systems and process that we have in

place and the emphasis on finding

ambitious people that have some sort of

X factor in what they do well.

So that's why it's important for us that

both myself and our partners in the in

the fund have the domain expertise that

we have because our ability to ex to to

identify the X factor that certain

talent has in the room I think is bar

none. Um, so that means that instead of

us having um I think about it on both

ends of the spectrum, too tight of a

selection process where we sit there and

say um if you don't graduate from a top

tier school and your GPA is a 4.2 and

your SATs were off the charts, we don't

want you. I think that's wrong. Some of

the best stock pickers I've ever seen,

you wouldn't be able to see it on paper.

Wasn't about where they came from,

wasn't about what school they graduated

from. had a lot more to do with their

grit and passion than anything. And then

on the other side of the spectrum,

oftentimes people will look a model like

this and say, why are you gonna have

adverse selection? Are the people that

are going to walk in the doors because

they couldn't walk in the door at

Citadel or Balasnne or one of these

majors?

>> And that's why I bring up the point that

I brought about independence. I think

that's completely wrong. I think if you

talk to the talent in the room in the

whole ecosystem today, they're the most

talented managers in the world. They're

just looking for an alternate path. So,

we can talk to both ends of the talent

spectrum, be an offering for both

emerging and established managers and be

successful for both. But back, and

sorry, long-winded answer, our ability

to attract talent is really the success

stories that we have. I truly believe

that if we do what we do, we keep

reinvesting in the systems, we are

coaches on the field, we care about the

players, we care about the outcome for

the PMs, that's how we will be

successful because we graduate a cohort

of success in 2026, they'll be an even

better cohort in 27. We graduate a

cohort of success in 27, it'll be even

better in 28. Um, and that's what I get

so excited about because u, as Rey

pointed out, I thought about this

morning. I said, "We got to we have to

establish a business here that's going

to last a hundred years at least because

we want to have one cohort of 50-year

successful businesses and then we want

to have a second generation.

>> I want to be able to graduate my

children into this business and have

them do the same thing that I do and

then them have a whole generation of

success behind them." And that's what

that's what we're really building here,

which is just so different than what's

really being offered in the market today

because as you well know a lot of the

success is in this mercenary type model

where you know success is defined in you

know whether you last two years or three

before your draw down. We're sitting

there saying, "Why don't we sit there

and talk about if you're going to

succeed for 20 to 30 years?" Like,

that's what success looks like to us.

Um, and the more we get that message out

there, I think the more aligned talent

we will find who believes in just that

and is looking to build a business for

the next 50 years.

>> Talk to me a little bit about the

screening process. You mentioned X

factors that you and that you and your

partners

No bias, but your ability to screen

talent is bar none, right? What does

that screening process look like? And

then maybe it's a bit loaded, but if you

could talk to me a little bit about the

graduating class and so how that

mechanically works at Riptide.

>> Great. Um,

one, you bring up a good point.

Because we're willing

to find undiscovered talent, we're

willing to turn over more rocks and find

highly talented people and in places

that most people are not looking. Um,

you know, we always say internally, the

truth is is that if you're coming out of

Citadel or Viking, no, we don't really

have a shot at you. Like the truth is is

that you're highly talented and it's

gonna be very well known. You know, it's

like a mega cap stock that's covered by

30 analysts. Like believe me, everyone

knows what's going on. So when I sit

there and say our ability to uh analyze

talent is bar none, the pitching is a

little bit slower at the end of our

spectrum because it's just it's not that

these people in the right environment

would go undiscovered. It's just people

don't really have the time to underwrite

talent when it's at a small scale. And I

should say that based on the AUM that

they're they're running. So where what's

our specialty? Our specialty is

person who's coming out of um a single

manager port uh PM um single manager

hedge fund, sorry. Um they were the

number two. They had great great

results, but they've they they didn't

have the P&L. they didn't have the track

record. The fact is is that they were

reporting to somebody and someone else

is pulling the trigger. But we sit down

with that, you know, younger junior PM

[clears throat] um who's now ready to

run risk on their own and we go straight

through their process. We don't ask what

their P&L is. You know, arguably they'd

sit there and say, "I don't have a

portable track record yet." But we start

to ask the questions like, "How do you

find your stocks? What work do you do?

What are you willing to do?

you know, and I don't want, you know,

swan songs and, you know, war stories,

but you you'll find that you just can

quickly figure out how people do it and

how they generate their alpha and that

input and that process is so meaningful

to how they are going to be as a

portfolio manager. So

uh at my old firm OIR um who are

tremendously talented you know Andrew

Mitchell and Stephen Ing Andrews uh

opportunities fund has done 22% net

returns for 16 years.

>> Wow. is the best performing fund in

Australia by far. And I knew Andrew.

Andrew and I met on a bus tour going

from China down to Vietnam [laughter] to

see every small cap Australian stock

that was based in uh either China or or

Vietnam. There's a casino called Donico

in Vietnam.

>> Wow.

>> Um and that was in 2012. And Andrew was

running $20 million at that point. He

had just started Ofir probably about two

years prior. Um he now runs three plus

billion dollars and uh as mentioned has

one of the best track records um I've

ever seen. Um but the truth of it was is

that we sat on the back of that bus for

3 days

and just talked about stocks for like

six hours.

What are you seeing? What are you doing?

What do you care about? Let's go meet a

company. We got to jump out of the bus

because we're gonna go meet a moped

company. Let's talk about that for

another two hours. And honestly, his

passion for the business, it just it

jumped off the page. Um, and you know,

aspirationally, I want to be similar.

Um, I think I've grown to be someone

similar to be honest with you. And I've

had the pleasure of working for people

like that my whole life. my IPM Ira

Unshield at Brandt Point um who um has

been in the business for 25 30 years,

used to work for Peter Lynch at

Fidelity, uh has run his firm to great

success for all of those decades. You

know, risk manages extremely well. I can

go have dinner with him and we'll talk

about stocks for three hours. [laughter]

So, the long story short of this is we

look for that same passion out of the

people that we converse with. Like you

can just feel it when it's different.

When you sit down with somebody and say,

"How much do you care about the markets?

How much do you care about stocks? Let's

just talk about the business and your

investment style forever long you're

willing to." And the people that you

know light up and talk about what they

do and what they do well and how they're

finding alpha and where their mistakes

have been. You can learn so much more

about a person in that type of

conversation versus pulling up a tear

sheet and saying, "Here's your P&L for

the last three years. Your sharp ratio

is a 2.1. Um, here's your sector

coverage. Okay, great. You're hired. We

want you here. You know, we're going to

go allocate capital to you." And that's

a big reason that we built this

continuum of talent within Riptide is

because a lot of times you won't see

that on a page. And a lot of times

you'll discover that through the process

where you see somebody investing in a

live environment for three months and

you sit there and go, "Wow, that

person's a weapon." Um, they should be

getting more capital. And I wouldn't

have known that on a first pass. I

wouldn't have known that through a first

interview. The only way you really know

it is by seeing them on the field. You

know, it's like somebody who's not great

at the combine. You know, they run a

4640.

you know, they got 12 reps on the bench

press and then that you see them on the

field during a game and you go, "Wow,

that person's a lot faster than I

remember." Because they just have an

instinct to them. They know where to

find the ball. You know, they play hard,

they play with grit, they play with

passion. That's what we that's what we

want to do. So, to your point, you know,

you think about that filter as much as a

filter that we have and and a screening

process.

In some ways, we try to be

anti-screening.

We try to put people in a position where

they can get on the field at Riptide

where they couldn't get on the field

otherwise so they can prove it in in

real time. And that goes to your

question about the structure. So how

we've structured this and it came with

tremendous purpose is we effectively

have three funds and and a pot of gold

at the end of the rainbow. The first

fund is the opportunities fund and that

by design is bring your own capital,

prove your strategy and we designed that

not for us to have the equivalent of a

first loss type fund because you know

they would tell you the same thing bring

your own capital and and prove out your

own strategy is we really wanted it to

be a frictionless way for people to

access the platform. So all of a sudden

I'm not in the hiring game. I can't say

no. I can't say Ethan hasn't done enough

to be on the platform. If Ethan shows up

with $250,000 and says, "I'm going to go

run and capitalize my own strategy." We

allow you to do that. You know, we call

that uh single a ball. You know, you're

kind of bringing your own bat and

bringing your own cleats, but at least

you're going to be here and you're going

to get at bats and we're going to start

tracking your statistics in real time.

So, we've built proprietary talent

assessment vehicles, uh, technology on

the platform. We've done whatever it

takes to make sure that whatever you

perform, even in single A ball, gets on

your baseball card and gets proven out.

So, you have the opportunities fund, and

then we have two different tracks. We

have market neutral, which we think is

the biggest capital opportunity. Um, we

understand that business very well.

We've got people on our team that come

from that model and we think it

generates tremendous risk adjusted

returns. So we want to make sure that if

people are willing to run that type of

style that we have a way for you to run

that type of style on the platform. And

then we have what we call flexible

equity. Flexible equity allows you to

take a little more risk in your

portfolio. You know, call it 30% net

exposure instead of zero. And we want to

have that available on the platform

because the truth is is that sometimes

that manager wants to have a more

flexible path and they maybe they've run

market neutral and they sit there and

say I want to run something that gives

me a little more style freedom that

allows me to take a little more risk

when I think it's appropriate. Um so

then you get to choose your own

adventure and you get to choose where

you want to take your strategy and

sometimes people run both strategies.

It's becoming more and more common.

People say, you know, I have an

expertise in energy and I can run that

on market neutral, but I want to run

something that's more 13030 is what they

call it. You know, I take a little more

risk. I might even put my personal

capital in the 13030 because I'm willing

to take a little more draw down, but get

a higher return over time, but I still

know how to run this and this is

institutional grade. So the idea here is

you have a frictionless way to enter the

platform and you can prove your strategy

and your track record and then we have

these two multistrats that we run. We

are the discretionary fund managers on

both of those which gives us the freedom

to allocate capital to strategies that

are emerging here or strategies that

come directly into those funds. So we

were I was talking about it earlier

today. The best analogy is this is

really a single a ball and when like

you're a young talent, you bring your

own cleats, you bring your own bat, you

bring your own capital, I can't say no

to you, you're willing to be on the

field, that's great. This is really AAA

ball, these two fonts. We kind of skip

over double A ball. Um because we're

always looking for people that are in

the younger side of their talent cycle

that are just emerging. We don't really

want people that, no offense to them,

you know, have been doing this for 30

years, it's never really worked out for

them and there's really no kind of uh

pathway to success. We're looking for

people in their 20s, their 30s, early

40s that, you know, are, you know,

looking for a path to success. Um, so

opportunities fund, two allocation funds

that gives us an ability to deploy

capital and and scale strategies over

time. Um, and then that platform, the

triangle that begins your your journey

should get you from, call it $2 million

of your own capital, maybe it's

$250,000. We're pretty agnostic to what

it is to $20 million, $25 million of

capital in your strategy. If you earn a

seat in the market neutral fund, you'll

be running $200 million. So there's just

bigger capital sources there, but they

serve the same purpose in the sense that

the moment that you do have some scale

to your strategy, then you have enough

capital momentum to go launch an

independent fund. And that's the fourth

kind of uh element to the the diamond of

a sorts that we have. And that's what's

most important to us because we sit

there and say there's a lot of

strategies out there that are call it

sub $10 million. Um, we want to give

them an avenue to gather capital on the

platform so we can get them to a

sufficient level of scale. And by the

time you get to $25 million, the ability

for larger allocators to then invest in

your strategy is so much higher than it

is when you're $2 million. But there's a

big void in the market today of who

takes you from two to 25. So like a

great partner of ours used to work for a

seating platform and they only wrote $25

to $50 million checks and he always sat

there and said guy's running $5 million

in a strategy. There's nothing we can do

for him. It's too big of a cannonball in

the deep end.

>> Like we can't be 90% of your capital. So

how do you get from two to 25?

Traditionally, that's done through

family, friends, relatives, um, family

offices, like whoever you can just

continually have conversations with that

are willing to give you a million, $2

million at a time. We aggregate that in

many ways in especially in our flexible

equity strategy to then have those

seedling of capital that allow you to

grow. Um and that's how we get people to

a sufficient level of scale. Um

in the and it's worth mentioning in the

market neutral fund that we think will

be underwritten by a bigger strategic

partner. So opportunities fund flexible

equity seedlings of capital along the

way gets you to a $25 million portfolio.

Opportunities fund market neutral.

market neutral is going to have maybe

five seats in it. It'll be more

exclusive. It's a tougher style to run.

We effectively have ex Citadel

Millennium colleagues that know how to

run it very well. Um, and the goal there

is to effectively have people that are

AAA to major leagues. So, those seats

will be a little harder to earn, but

once you're there, sky's the limit. So,

one of these pathways is I always think

of it as a pathway to flexible equity

probably has more independence to be

frank with you. Gives you a little more

strategy and style flexibility

um and is going to allow you to run a a

strategy on your own terms for a long

time. A path to market neutral allows

you to access capital in a meaningful

way. Um has inroads to very deep pools

of capital. Um, and it's going to allow

you to kind of springboard to success

pretty early in your career. Um, and you

could get a billion-dollar portfolio in

three to five years from a starting

point where, you know, that pathway to

success may uh never have been

established before RIP done.

>> It's fascinating. There's so many things

you've mentioned there that I want to

ask about. Um, but the one that

I guess I can't help but be curious.

You get an analyst at the starter or PM

running their own money through the

opportunities fund at Riptide. They

graduate to either flexible equity or to

the market neutral

and they perform really well. They own

their track record. And you say that the

diamond that completes it is them

starting their own fund. And that would

be like this is the journey for the

talent that you want to seed.

I don't know if this is a dumb question,

but um they're at the end of that.

They've started their own business. How

do you benefit? How do you how does

Riptide win as well if they if they're

running their own business? You know,

>> it's a good question and that's why we

had to fill out kind of our roster of

talent. Yeah. Because our we asked

ourselves the same thing internally.

>> Yep.

>> So, I've been a fund manager all my

life. Y

>> I know how to run capital. I know how to

raise capital. I know how to run in a

compliant environment. I've never been

in a uh GP staking or revenue share

business, but luckily we found a partner

who has. Um, so the idea for us is let's

say you're being you're successful

whether it's in a flexible equity path

which will be more independent but may

take a a slower seedling type approach

or you springboard into the market

neutral uh and you do well there um and

you yeah you you know you're you're uh

in line to go launch your own

independent fund. There's a point in

time in that journey where we enter a

strategic partnership conversation.

Um, we think of it a car as a carrot,

not a stick. So, we'll sit there and

say, "Okay, track record's excellent,

Ethan. We think uh we're going to give

you $25 million in flexible equity. Um,

can we take a 20% revenue share in the

business?" Why do we want to do that?

Now, let's say you're 25 and we're going

to take you to 50.

>> Yeah.

>> Sometimes people will sit there and say,

"If you want the 25, you got to take the

revenue share." I think of it in a

different way.

Take the 25, let's do a revenue share.

You're now $50 million. We are entering

that strategic partnership because we

believe that you should be a $500

million strategy. And now we have a

massive incentive to go and take you to

scale. So a partner of mine does a great

job of explaining this where he says

effectively a fund that let's say you

seated at $50 million it grows to 500

million the LP return let's say you do

15% a year as a fund manager the LP

returns 15% net the GP return is

probably 30 because you're getting 20%

of the overall revenue as that business

scales

so we enter that conversation with a

strateic IC partnership which then

allows us and our our uh LPs to have a

GP and LP relationship in a revenue

share agreement which then gives you

outsized returns. So GP stake revenue

share whatever you want to call it.

There's different structures to it but

very beneficial to the LPs, beneficial

to us because we're the fund managers.

We now have a product that's generating

30% returns. Then you flip it and say,

"Well, if I'm a fund manager, why would

I sell you 20% of my business?" And

statistics have proven and our model is

built that if you bring on the right

capital at the right point in your fund

that that pathway to $500 million is a

lot more viable.

And if you think about for ourselves, we

now have that aligned incentive to do

so. So we have big institutional grade

allocator partners that are on that the

the far point of the qu uh the diamond

that we talked about who are sitting

there saying we want $500 million

strategies.

We want people that can run capital at

scale

>> and Riptide as a trusted platform. If we

can source the talent from your

platform, we want to participate in that

early stage and get a GP stake and then

allocate behind it. So then we can get

you to scale. So we will take

effectively partnership stakes in funds

as they scale. Market neutral will be no

different. So the concept here is we'll

have that market neutral fund as we

discussed. It has these bigger pools of

capital. part of getting those pools of

capital will have what we call a right

of first refusal on the capacity of your

strategy. So, whoever our strategic

partner is on the market neutral side is

thinking the same way. Well, if we make

$500 million available for your market

neutral strategy, the real long-term

value for us is if we can find two maybe

one, maybe two PMs from that that pool

and graduate them to two billion dollar

portfolios. M

>> but if we're going to make capital

available for you uh on a seeding basis,

we want to have capacity rights and a

revenue share to that strategy over the

next you know eight years

>> or whatever the duration is. But what we

do is we make sure that there's very

good alignment in that i.e. The only way

that you get that revenue share from the

manager is if they hit that AUM

threshold and they effectively you can

exercise your call option on their

success.

>> So it is very important in the process.

Now why I hedge that is I think about it

as a carrot or a stick.

>> Um we're flexible

everything is structuring every every

strategy could have a different uh

different incentive. We will come across

managers who sit there and say, "I have

no interest in selling you a portion of

my business and we'll be fine allocating

to them. They're great strategies and

they'll do quite well." Um, but that is

the mechanism we use to really ensure

success. And the truth is is that if we

do that well, I think once again we're

going to free up a lot of capital

sources for our managers because in

everything that we discussed, we're in a

we're in an environment where talent is

uh you know scarce in many ways and we

think of ourselves as a place where a

strategic partner could come in, access

talent and get a a right of first

refusal on that strategy as it scales

which is a win for all parties.

Tyler, we've talked during this

conversation a lot about talent and

about the business and about how that

talent fits in and you both hope will

eventually graduate to bigger things

within the platform.

I want to hear now a bit more about how

it's been like raising capital.

You mentioned allocators. What's it like

as a startup multi-manager?

How's that been?

>> Good. I would I dare say pleasantly

surprising. [laughter]

Now, the truth is a couple things. We'll

start on the smaller end of the

spectrum. We'll work up to strategic

partners um who are larger pools of

capital. So, on the smaller end of the

spectrum,

I think we have a very bespoke

um and potentially high performing

strategy. Um and I think that'll prove

out over time. It's everything we talked

about. I think the whole talent pool

that we're trying to access is highly

motivated in the the optimal point of

their alpha curve has a potential to

outperform the hedge fund index by eight

points. I truly believe that especially

with the right environment, the right

coaching and the right tools. Um so when

we go to family offices, RAAS, etc., We

can sit there and believably say you now

have a single source of public equity

strategies one platform which for them

before you know a typical let's just say

a family office let's say they wanted to

be active in public equities the

allocation mechanism prior to Ripide was

potentially 10 different LP

subscriptions so if you think about that

that's taking capital out of your

account investing in 10 different LP PS

getting 10 different K1s um aggregating

those at the end of the year um and then

receiving whatever the aggregate returns

were for those strategies. There's one

an operational headache to that just a

fact. You know it's money out the door

K1s etc. Two which I honestly think is

very hard to solve for there's a

riskmanagement deficit to that. Now you

have 10 strategies that you've invested

in. what's the aggregate of their risk

if you were to think about them as a

portfolio unless you're very

sophisticated and there are

sophisticated RAAS that do this fund of

funds usually serve this purpose at some

point in life um you don't really know

what the aggregate risk of those

strategies are you know I always say all

10 of them could be you know long Nvidia

yeah

>> uh you wouldn't really know it unless

you know you were really diligent about

the reporting you got from those

managers but most of those managers only

need to report their holdings to you

quarterly if anything.

>> So you sit there and say okay so how do

we innovate for family offices and I'll

put raas in the same in the same uh

place let's build a platform which

allows very efficient deployment of

assets into alpha generating strategies.

So you can come to our platform and you

can go invest our multimmanagers and get

a diversified

portfolio of strategies. That's what it

is by design. We are being that risk

manager who's going to go find 10

strategies aggregate it into a very risk

uh aware return and and serve that

purpose. So now you've got one person

you can invest in. You can go get 10

active strategies instead of spreading

out 10 LP subscriptions.

You could also do it on a uh alle cart

basis. You could go out there and we'll

have strategies on our platform. They're

all available for direct investment. So

let's say to our point about independent

funds, we have multiple independent

funds that are launching on the

platform. You may sit there and say,

"Hey, I just want to invest in um this

fund that's focused on uh defense

companies. Uh I want to invest in this

fund that's going to do tax aware

strategies. It's going to be able to

harvest capital losses or one strategy

we'll have will be able to harvest

ordinary losses to offset ordinary

gains. and then maybe I'll I'll put some

money with your flexible equity fund

because I'll I'm willing to take some

variable net exposure and I I'll put

some money in the market neutral as well

because that's got great riskadjusted

returns and you're welcome to do that.

Now you have one place to go. So we've

really just simplified the world which

is usually pretty complex and hard to to

to deal with to be honest. So when we

bring that message to market, a lot of

family offices and raas kind of just

raise their hand and say, "Sign me up."

Because we're making their life easier

and we're giving them access to

proprietary product that they didn't

have access to before. So that's I

always think about that as a great way

to build the business up over time. Um,

we're constantly trying to be innovative

in uh solving for capital and and

allowing them to to invest with comfort

and convenience to be frank. Um, and

that's, you know, millions of dollars,

$5 million, $10 million here or there.

Um, which is not an insignificant amount

of money. So, and we can build that

capital pool up over time. And then you

go to the other end of the spectrum and

you have these big strategic partners

that we discussed. And I think about

those as being focused mostly on the

market neutral product, but but on

flexible equity as well. So let's take

the market neutral view as we discussed

because we have such strategic value to

the overall ecosystem.

Strategic partners are saying let's

discuss what you're building here

because the truth is is that exactly

what we we we were talking about before.

If you allow us to access capital early

and allow these portfolio managers to

build a book in Riptide, one you're

going to get full transparency to their

performance.

two, I think you're going to get great

LP returns. We're willing to give you a

GP stake in the fund and the underlying

strategies within the market neutral

fund and for you get a right of first

refusal on those strategies as they

grow.

>> And the truth of the system today is

there's capital allocators that have

billions and billions of dollars that

are looking for market neutral

strategies is is really doure um but

they can't access the talent. So we sit

there and say you make a small bet on us

and then you get to, you know, we call

bullets and cannonballs. You know, you

spread a couple bullets within the

Riptide system. Um, we'll we'll risk

manage it as if it's an institutional

grade multi manager. So it's not like

you're sitting there at the risk of a a

high loss. You know, we're going to

we're going to run this like, you know,

you were in, you know, uh, the the four

walls of Citadel or Balazne or anyone

else. Um, and you get a call option on

on on talent as it emerges from that

that strategy. And when you say that out

loud to a strategic partner, it almost

sounds too good to be true, but it's

it's the truth. So all of a sudden, you

can get a great LP return, you can get

GP type economics if the product itself

winds up being very successful, and you

get a call option on talent, and you get

to outsource the harvesting of that

talent to us. So then you don't have to

take your internal resources and figure

out how you're going to risk manage, how

you're going to coach, how you're going

to be a mentor. We do that full-time.

Um, and that's that resonates very much

so with strategic partners. And I'll

touch on flexible equity as well.

There's an element to flexible equity as

well. So, like I said, we could do that

in singles, you know, ones and twos,

fives and tens, but there are partners

of ours that sit there and say, "We're

looking for doesn't have to be market

neutral. We we're just looking for a

strategy we can we can um we can scale

to $500 million." Um, and it could be

variable net. It could run 30% net. Um,

let's utilize the Riptide platform in a

very similar way, which is Farm League,

you know, talent goes and and uh it get

winds up maturing into a large fund uh

and we get a a right to it. Um, we're

happy to step up and be a strategic

partner early.

>> Exciting. Super exciting.

We're almost at the end of the

conversation. Tyler

and we've talked about I think almost

all aspects of the Riptide platform, but

if you had to say just one thing,

the number one value ad that Riptide

provides that is not provided by

Citadel, Millennium, BAM, 72, all the

multi-managers.

What is that value at?

It's really an opportunity. I truly

believe that. So, we can go back to

either end of the spectrum here. For the

younger talent,

you're going to get discovered when you

deserve to be discovered. Um, and that's

a core belief of mine. It's a passion of

mine. You can probably hear it in the

tone of this conversation. I just think

that there's unbelievable people that

are making great investment decisions

every day and they deserve to have

capital and they deserve to be in an

environment that's going to allow them

to be successful and and get an annuity

on their success. And then if I think

about on the more established manager

side, once again, it's still

opportunities.

You know, we're trying to give people as

many call options to their success as

possible once again. And you may have

been established and you probably have

done well in life to be frank with you,

but you're sitting there and you're

asking yourself the conversation, you're

having the conversation of, well, what

do I do next? And you know, for argument

sake, it could be Citadel to 72, 72 to

Balazne, back to Millennium, and then

you do the rotation all over again. Um,

you do the rotation twice, right? I

think it's nearly impossible. [laughter]

But uh the truth is is that if you can

forge and be supportive in an

alternative path and give people an

opportunity to build their own fund,

which can be a daunting task, you know,

you need operational support, you need

business development support, everything

that goes into it. We're purpose-built

for that. So when we really think about

what we're doing in life, it's really

just swinging the pendulum of power back

in the favor of the portfolio manager

and sitting there saying you should be

empowered. You should have optionality

in what you do. You don't need to have

golden handcuffs, long lockups,

clawbacks, you know, people telling you

that, you know, two years and if you're

down, you're out and then you have to

sit out for two years. We're just trying

to give people the most talented people

in the world, an opportunity here and

independence here. And that's what we do

very well. I love that. Thank you so

much for coming on Odds on Open. That

was a wonderful conversation.

>> Great. I enjoyed it. Thanks for having

me.