#233: Chaya Slain (Virtera Partners) — Dare To Be Different, Dare To Be Great

Chaya Slain [00:00:00]:
First of all, I believe in meritocracy and I work really, really hard and I also have strong opinions about how a company should run. I think culture is super, super important. And so it's only when you have your own business that you can put all those pieces into place and you basically say, okay, I'm gonna eat when I kill, I'm gonna have to build something. It's on me to build something great. And if I don't do it right, it's on me. And then conversely, if I do it well, I'll benefit. So it's really, it's really exciting. Besides having kids, it's prob. Fun, exhilarating, challenging experience I ever have.

Jeffrey Stern [00:00:36]:
Welcome to the Lay of the Land podcast where we are exploring what people are building in Cleveland and throughout Northeast Ohio. I am your host Jeffrey Stern and today I had the pleasure of speaking with Haya, slain founder, President and Chief Investment Officer at Virterra Partners. After studying mathematics at Columbia University, she discovered her deeper interest in investing while at Goldman Sachs and after several years in New York, she returned to Cleveland and joined Parkwood, the Mandel family investment office, where she spent more than a decade immersed in the world of institutional investing. At Parkwood, she developed a disciplined, process driven investment philosophy, built relationships with leading private equity, hedge fund and real estate managers, and learned directly from Mort Mandel's cultural and strategic principles. In 2020, Haya stepped out on her own and founded Verterra Partners, a boutique investment firm designed to offer ultra high net worth families the sophistication of a top tier institutional allocator. With the personal attention of a single family office, Verterra has grown into a platform providing clients access to differentiated public and private market opportunities supported by deep sourcing, rigorous diligence, and a willingness to go against the grain when the data supports it. In our conversation today, we trace Haya's journey from Wall street to Cleveland, her early entrepreneurial spark running a deli during her time at Columbia, the leap from investor to founder and entrepreneur, and the empathy and insight that transition has given her. When evaluating other entrepreneurs and investment managers, we explore behavioral discipline, portfolio construction in uncertain markets, long term thinking, and what it means to build with integrity and a true sense of stewardship.

Jeffrey Stern [00:02:17]:
As someone who personally loves this intersection of investing and entrepreneurship, it was awesome to hear Hai's reflections on it and learn from her experience in her first ever podcast appearance. So please enjoy this great conversation with Hyatt Slane. Lay of the Land is brought to you and is proudly sponsored by Roundstone Insurance Headquartered in Rocky River, Ohio, Roundstone shares Lay of the Land's same passion for bold ideas and lasting impact from our community's entrepreneurs, innovators and leaders. Since 2005, Roundstone has pioneered a self funded captive health insurance model that delivers robust savings for small and medium sized businesses. They are part of the solution to rising healthcare costs, helping employers offer affordable, high quality care while driving job creation and economic growth throughout Northeast Ohio. Like many of the voices featured on Lay of the Land, including Roundstone's founder and CEO Mike Schroeder, Roundstone believes entrepreneurship, innovation and community to be the cornerstones of progress. To learn more about how Roundstone is transforming employee health benefits by empowering employers to save thousands in per employee per year healthcare costs, please visit roundstoneinsurance.com Roundstone Insurance built for entrepreneurs, backed by innovation, committed to Cleveland this is a conversation a long time in the making and I am very excited to finally be able to have it with you. So first off, thank you for coming.

Chaya Slain [00:03:44]:
On for sure, thanks for having me.

Jeffrey Stern [00:03:48]:
So I think it would just be good to kind of ground the whole conversation in your personal story and you know where you feel the original spark of interest came from for. For investing.

Chaya Slain [00:04:00]:
Sure. So going back to my background a little bit, I'll just talk about where I started my career, which was at Goldman Sachs and that is also a backstory a little bit beyond that. I had been going to Columbia University, I was getting a degree in math and unfortunately my mom was diagnosed with cancer when I was in my sophomore year in college. And that meant that I needed to basically put myself through school. I was lucky. I actually had a scholarship which covered a lot of the cost. But I needed to figure out a way to put myself through school and pay my expenses and all that. And so I found a great opportunity to work at Goldman Sachs where I could basically help out in various places doing a variety of things.

Chaya Slain [00:04:50]:
And I thought, okay, this is a great way for me to get a great job. And so I worked really hard there. But when I had free time I would knock on all the partners doors and I would go in and introduce myself and ask them to tell me more about what they did. And it was really a great opportunity for me to talk and meet with really amazing people, really high powered people. And so from there basically created an internship from myself during my junior year in college, which was pretty cool. It wasn't an official program, but one of the vice presidents needed to do some work and so she said I need you to do some Analysis for me. Can you do it? And so we created this job. From there it led to a summer internship and then from there a full time job, which was pretty cool.

Chaya Slain [00:05:34]:
And I would say that one of the things I loved about working, I was actually in the investment banking group there. And one of the things I loved about Goldman and what also what I loved about investing was I would say a number of things. So first of all, as I mentioned, I was a math major. I'm a very analytical person, but unlike all the other people in my math department or many of them, I actually really love people. And so I really needed something where I had this combination of analytical skills and also not being stuck in a room somewhere doing analysis. I wanted to actually work with people and develop relationships. That was super important to me. So investment banking and investing really fit that, fit that bill and that was a great opportunity.

Chaya Slain [00:06:18]:
And of course the other thing was working at Goldman. And then currently what I'm doing now, it continues to be that way, which is that I'm working with some really, really smart, amazing people. And it's just really exciting working with those kind of people. It's just pushes you to perform at your highest level. So that was the, that was investment banking. I, I slowly made my way back to Cleveland and that's where I got into investment investing. And I ended up, I ended up trying to figure out what I wanted to do. I really, I, I really enjoyed banking.

Chaya Slain [00:06:51]:
It was really, really fun. But it was also incredibly challenging in terms of the, the time constraint. I mean, you never had vacations. And at that point I was actually a mom of two young kids. And so I was looking for other opportunities. I started networking when I came back to Cleveland and I was introduced to the group, the group called Parkwood, which is the single family offers for the Mandel family. And it was the right fit. And so that was my entree to institutional investing.

Jeffrey Stern [00:07:22]:
Yeah, with your interest in mathematics, was there, what, what do you, what was your like, introduction to investing? Had you thought about it before or was it, you know, just kind of stumbling into it and, and then it, realizing that it resonated with, with what it was that you wanted to do?

Chaya Slain [00:07:39]:
Well, I was always interested in investing in general because I was trying to figure out how I could, I mean, trying to figure out how I could generate wealth. I knew that investing was the way to do it and I needed to make money and then invest the money. And so I was, I was really just trying to navigate my way and figure out the best way to. To do that. I wasn't actually sure what the best way. I was really doing a lot of research. But I would say that when I decided to study math, it was more just an interest that I knew was applicable to a lot of different things. To this day, I'm grateful that I have that degree in math.

Jeffrey Stern [00:08:18]:
So take us through kind of what you learned from your time at Parkwood and what you kind of carry with you from. From that experience and how it shaped your. Your approach to. To investing.

Chaya Slain [00:08:32]:
Sure. Thanks. So Parkwood was an amazing experience as it relates to starting a career in institutional investing. So first of all, it's just a special place. I had the opportunity to get to know the three Mandel brothers who are just have an amazing story in terms of the way that they came here as immigrants to this country and then built a multibillion dollar business and each of them became billionaires. And, and. But what's also special is that they actually gifted a lot of the money that they made it to their foundation and working there was really personally meaningful for me. I think it's.

Chaya Slain [00:09:08]:
I think that the Mandel brothers actually helped Cleveland become the city that it is. Their philanthropy supported so many educational and cultural institutions in this city. And it was really, really cool being able to work at a place like that, getting to know the three brothers and knowing that the investment work we were doing were supporting our, our city like it's. It was pretty amazing. So that was the one piece of it. And I would say working with Mort was also really terrific. Everyone knows his book, It's all about who. It's a great book.

Chaya Slain [00:09:39]:
But working with him, you learn more than just the importance of people. He was extremely process oriented and I truly believe the process is the basis for creating for good decision making, both on the investment side, running the business. He also. There were many, many other. He had these like isms that he had things that he said that just are embedded in my mind. And so I'm very grateful for that. But another thing about Parkwood that's pretty cool was first of all, it helped me develop my network. We were connected with some of the largest family offices in the country.

Chaya Slain [00:10:13]:
We were connected to the founders of Google, the founders of Alibaba are two examples. We also had these quarterly meetings where everyone on the would get together and we would have managers come and present to us on a quarterly basis. And that was pretty cool because Parkwood were early investors in private equity before it was the thing to do. They were invested in some of the biggest Hedge funds. So we had people like Jonathan Gray from Blackstone, Paul Singer from Elliot, David Bonderman from TBG coming to our group. We had an intimate group. I got to know these people personally, and that's super, super exciting. And so I would say that was an amazing opportunity in terms of network, in terms of learning.

Chaya Slain [00:11:01]:
Learning from Mort and his brothers, and also learning from some of the great investors in the. In the investment world.

Jeffrey Stern [00:11:09]:
Yeah. Do. Do you remember what some of those isms were? I love those sort of pithy aphorism kind of learnings.

Chaya Slain [00:11:20]:
So he talked like. I mean, it's all about who was definitely drilled in. Another big one that he talked about that definitely is instilled in my brain is, start small, think big, get to know something. And I think that was a great way to think about starting new things. So don't just keep doing the old things. But. And. And we definitely applied that Perkwood and continue to apply that here.

Jeffrey Stern [00:11:45]:
So with regards to starting something new, I mean, ultimately, you made the jump to be a founder yourself, obviously with an investment mindset and focus. But I love to understand the kind of entrepreneurial evolution, if you will, and how you kind of made that transition and really, you know, what. What your relationship to entrepreneurship was.

Chaya Slain [00:12:14]:
Good question. I am. I've realized I am an entrepreneur. Like, I think some people are born a certain way, and I definitely have this, like, entrepreneur inside of me. I actually started my entrepreneurial journey when I was at Columbia. Columbia had this pretty cool program where they really encouraged students to create businesses. And so my business that I was responsible for was actually called was the Hartley Deli. I had to run this deli, and I ran it on my own.

Chaya Slain [00:12:43]:
And one of the things that was pretty cool about it was that to the extent that when these businesses were started, Columbia would provide all the funding, but then once you like, you would go negative until you. And then when you started making money, all profits were then split 50, 50 between the entrepreneur and the university, which was pretty cool. It basically meant the harder I work, the more money I make. And it was a lot of work, but it was really fun. It was really cool. There were moments where one of my employees would call me and say, can't make it to my shift. And I would have to decide what to do, whether to close the deli, prime time, or miss a class and whatever it was. So.

Chaya Slain [00:13:19]:
So that was really cool. And it also, like, guided me in terms of recognizing the importance of how you run things. There's a lot of different elements to running A business. And I think, like, I think now that some of that informs how I. I do things now, which includes the importance of doing it right, treating people right. I was, like, meticulous. Like, I wanted to make sure the tomatoes were cut a certain way, and I didn't want any of those pink tomatoes. I wanted nice tomatoes on the sandwiches.

Chaya Slain [00:13:48]:
That's, I think, definitely is how I think about things now. But until I founded For Tara, I had really not run a business. I'd been an employee until. For. Until that time. And ultimately, what it came down to is that, first of all, I believe in meritocracy, and I work really, really hard. And I also have strong opinions about how company should run. I think culture is super, super important.

Chaya Slain [00:14:14]:
And so it's only when you have your own business that you can put all those pieces into place. And you basically say, okay, I'm going to eat when I kill. I'm going to have to build something. It's on me to build something great. And if I don't do it right, it's on me. And then, conversely, if I do it well, I'll benefit. So it's really. It's really exciting.

Chaya Slain [00:14:31]:
I've been finding it the. Besides having kids, it's probably the most fun, exhilarating, challenging experience I ever have. And sometimes I kind of refer this to my, like, seventh kid. So.

Jeffrey Stern [00:14:47]:
Well, what. What inspired you to ultimately make that. That leap? And. And how did you go about actually getting started?

Chaya Slain [00:14:55]:
So, you know, things were going just fine at Parkwood. It was a great place to work. And like I told you, I was working with really great people. But ultimately, the CIO is a guy named John McCloskey. He's a great guy, and I really like him. We're still friends, and I love hanging out with him, but he just a few years older than me, and so chances are he's going to be CIO there for a long time. And I was not going to have an opportunity to be cio. I wanted to.

Chaya Slain [00:15:23]:
I wanted to take my. Everything I was doing to the next level. So the piece on the meritocracy, I wanted to own a portfolio, and I also wanted to own a business. And so I was looking for opportunities to do that, and I found that opportunity with Joel Adelman, who's a very successful Cleveland entrepreneur. His father's also a serial entrepreneur. He's a serial entrepreneur. These are amazing, an amazing family, and they wanted someone to help them build an investment portfolio. And there's many families who generate a lot of wealth.

Chaya Slain [00:15:58]:
And they want help building an investment portfolio. They want to build a family office. And so the thing that I've realized is that family offices are actually very hard to build. They're important to build because when you generate a certain level of wealth, you need, you need, you need help. You're not just investing in stocks and bonds. You're entering this very opaque world of alternative investments, which can mean a lot of different things. It's hard to access these investments, it's hard to source them, it's hard to diligence them. You don't want to be the one who doesn't know what they're doing in this world of alternative investments.

Chaya Slain [00:16:36]:
But the challenge is, is that building out that office is expensive. And so what I thought, what I wanted to do when I talked to Joel was I said I'd like to build a small investment firm where we work with a few families and each family has a feeling like we're their single investment office. And I'm sure you've heard the term multifamily office, and I particularly don't use that term because we're trying to do something a bit different. We're trying to really provide very, very high touch service to every family that we work with, which is, we think the right way to create portfolios for families that have this kind of complexity and this level of wealth.

Jeffrey Stern [00:17:16]:
So how do you refer to it?

Chaya Slain [00:17:19]:
I call it a boutique investment firm or single family office for multiple families. I'm still, I still haven't figured it out, but I think generally, I say I run a boutique investment firm is generally what I call Verterra. And that's because in addition to the family office side, we do have a fun business, but that's, that's kind of where we are.

Jeffrey Stern [00:17:38]:
So you've talked already about to you the importance of process and discipline in making decisions generally. But obviously investment decisions take us through what that looks like in practice. How do you kind of employ that kind of thinking into your decision making? What are the things that, that you are weighing and staying disciplined about?

Chaya Slain [00:18:05]:
I would say, well, maybe two things that are important when you're thinking about creating your investment process. So one of them is, I think you need to do your own work. I've seen a lot of challenges where a lot of people are looking outside of themselves and trying to figure out what everyone else is doing. There's a benefit to seeing how the market's moving, but ultimately you have to make your own investment. You need to make your own decisions. And so we have a very well honed process in terms of we have a funnel for how we find investment opportunities. We don't. There's this concept called adverse selection, where it's like you don't want it to be that you only get what kind of comes into your inbox.

Chaya Slain [00:18:42]:
You want to be able to look out and see what is out there. That may be probably the best. Investment sponsors, I would say, are not kind of sending inbound inboxes to you. It's more that you have to go and find them because they have such great opportunities. They don't need to kind of be outbounding to you. So having those in those processes in place in terms of how you do it. But I think there's also an emotional aspect to investment decision making, which is that. And this is a lot of people talk, hear me talk about things like behavioral finance.

Chaya Slain [00:19:13]:
And that's a big passion of mine. And it, it ties into this question about process. And ultimately it goes, it goes to Daniel Kahneman, who wrote a book called Thinking Fast, Thinking Slow, which really breaks it down into. Human beings essentially have two forms of decision making. So one of them is our human brain, the part that we identify with most, where we feel like we're very rational and we make great decisions based on what makes sense. But there's also a part of us that is our animal brain. And that animal brain kicks in when. In various moments where often when you don't want to be making these kind of decisions.

Chaya Slain [00:19:50]:
So when we are fearful. So either where fear of losing money, like when markets are tanking and everyone's selling at the same time, that's when your animal brain kicks in and says sell. Similarly, there's this fear of missing out. So you think the market's expensive, but it keeps going up. So I'm just going to add more and more to whatever market's moving in that direction because I'm afraid everyone's making money and I'm not making money. So the best way to overcome those kind of behavioral biases and irrational thinking is to basically create a plan when you're calm and stick with that plan. And that can seems easy, but it's actually one of the hardest things you can do.

Jeffrey Stern [00:20:28]:
Yeah, I mean that, that, that specific component certainly resonates. I remember when I studied also economics in college and when we learned about Homo economicus, this idea of like the rational economic man, I'm like, I don't. This doesn't seem to track to reality to me. I mean, first off, not everyone is a Man. And second, you know, not every, nothing, almost nothing is rational about the way we behave.

Chaya Slain [00:20:55]:
True. It's funny, you know, I took, I have the CFA designation and when I studied it, they were very much firmly in this high efficient market hypothesis camp. And they minimized that there was anything to. Well, they talked a very little bit about technical analysis, which is actually just analyzing price movement, which is driven more by human emotion. And. But now I think that that's really changed. I think that you'll see that like general investment community believes in this notion that the markets are not always efficient.

Jeffrey Stern [00:21:34]:
Yeah. How, how do you try and if not remove, you know, mitigate the effects of emotion in your decision making process and just kind of raise your, your own awareness about your own biases when, when you think about the decision making process?

Chaya Slain [00:21:52]:
Well, I do think about it all the time. I think all the time what I'm. What I'm susceptible to. But ultimately Daniel Kahneman said that it, you learning and understanding these biases don't make you less susceptible to them. There are certain things that you are, it seems like, for example, like Stanley Druckenmiller, like he's like always calm and he doesn't seem to be swayed by certain things. I don't know if that's true or not. It just, that's the way he seems like a calm guy. I think one thing that I know about myself is that I feel comfortable doing things that are different than the crowd.

Chaya Slain [00:22:30]:
So that's just part of who I am. But in terms of being swayed by how things happen in the market, definitely I'm a human being like everyone else. And ultimately the only way to avoid these things is to create those processes that you adhere to very strictly and that you don't make a decision to change from that process unless it's in a calm moment, not in a not calm moment. That has to be your way. You make decisions. And so we do have a lot of processes. One of our investments, investment funds that we have is very, very systematic driven, that we have decisions being made, that this is the way we allocate the fund and we don't stray from that at all. And it's extremely important.

Chaya Slain [00:23:12]:
And we have various checks and balances internally to make sure that more than one of us has to make sure that we're on track on those and that we don't get off track in terms of the decision we made when we were calm and rational.

Jeffrey Stern [00:23:26]:
Yeah. How, how would you frame what your investment philosophy is generally and how it plays out in practice at, for Terra and, and just kind of the scope of the things that you're investing in and your, your approach to evaluating them.

Chaya Slain [00:23:47]:
So our investment philosophy is driven very much by that notion where, where I went back earlier where I said where a single family office to a number of families. The reason why that, that point is so important is because families I find are more than anyone not stuck into boxes in terms of what you should be invested in. When you, when you work with many other institutional investors, there's boxes that are checked and boxes that have to be filled. And I, I don't think, first of all there's any one investment that's right for everybody. There are categories of investments that are good. And I don't think that you ever want to be in a position where you say I have to be investing in this. Like I always need to have some part of my portfolio invested in small cap value. I don't believe that that's just an example.

Chaya Slain [00:24:40]:
It could be anything I could have put in there. I don't need to check a box that I have something in my portfolio if there's an opportunity that doesn't work at this point. And I mentioned small cap value, which is really more a public markets type. And I don't really believe that you can pick public markets. But as it relates in certain private markets, there's certain moments where there's not a great opportunity in that market. And I don't think that you should invest in that market just because you put a box there. So we, we won't do that. We really try to build a portfolio based on what opportunities are the best at the moment and what we think makes sense from a portfolio construction perspective.

Chaya Slain [00:25:21]:
And I think that that's a big piece of it. On our, on our website, actually we quote Howard Marks one of Howard Marks memo where he talks about dare to be different, dare to be great. And essentially, essentially what that means is that you do your own work, you figure out what is the right thing to do for your clients. You're not necessarily doing what everyone else is doing. It doesn't mean not doing what other people are doing. It doesn't mean being a contrarian just to be a contrarian, but it means that you're going to do those things. And those things can sometimes be hard, especially because of those behavioral biases that I mentioned. And so that's really, I think our investment philosophy in a nutshell.

Jeffrey Stern [00:26:06]:
Can you give an example or two of something contrarian just and how you think about that and where your own conviction in that comes from.

Chaya Slain [00:26:16]:
Yes. So I would say one of them is we recently raised a fund to invest in energy. We've been recommending energy to our clients probably since 2020, when oil prices were actually went negative. Energy is obviously a very difficult place to invest in. But what we found was that many people weren't investing in it for political reasons or environmental reasons. And if you're not investing because of those reasons, that's fine. And that's a decision that you can make. But if you are deciding whether or not you can make money in the oil and gas space, the answer is we think, we think that there are opportunities in certain areas to make money and it's just because prices are cheap, because so many people aren't investing.

Chaya Slain [00:27:01]:
The thing that's been interesting is that not only are there people not investing for these political or environmental type reasons, but they're also many people then see, are you investing in energy? No, I'm not investing in energy. So then they don't. No one else does it. So we kind of like picked it up and we said, is now the time to invest? And by the way, just because something is cheap doesn't mean it's the time to invest. It wasn't time to invest in 2017, 18 necessarily, or 16 when oil prices first went down. So basically what we did was we started talking to people in the energy space. We talked to probably at least 30 different public markets managers and 30 different private markets managers to try to understand what was the best place to put capital on the public side. We put a lot of money in MLPs and we like that space because there were a lot of great, there are a lot of great MLPs who had consistent dividends and distributions to their investors even through the chaos of oil prices, but their prices were low.

Chaya Slain [00:28:05]:
And we thought, well, this, this is interesting because we kind of get paid to wait. We get a consistent distribution. And since that time those markets have done great. They're actually still cheap in our opinion, and the distributions continue. And it's actually done very, very well. Even compared to equity like The S&P 500, it's done very well. And then on the private side, we found a spot where we thought we were going to get for the amount of risk we were taking. The return was really outstanding.

Chaya Slain [00:28:38]:
And so we got really comfortable in that space.

Jeffrey Stern [00:28:42]:
When you think about, I'm interested in this kind of, it's not necessarily contrarian, but when you think about operating an investment firm in Cleveland as opposed to New York, where you'd spend some time, do you find that it offers any advantages or challenges, or do you think about what it is to build your firm here as opposed to somewhere else?

Chaya Slain [00:29:08]:
Well, I love Cleveland. I was born and raised here, so I'm a big Cleveland fan. And people in Cleveland are great. So I love, I do have investors, actually, all over the country, but most of them, I would say, are based in Cleveland and they're, and they're great people to work with. Those are definitely benefits. But I would say from an investment perspective, I love being in Cleveland. I do think that there's a benefit, and it's just that you shut out all the noise. I think that it's interesting when you talk to people on the west coast, it's like they are all talking about the same things and there's some benefits because when you're on the west coast, they're really, like, thinking all the venture stuff they know, like the next best venture idea or tech that's coming on the market that's pretty cool that we don't know about.

Chaya Slain [00:29:54]:
But then, and then in New York, they're also, they're all talking about the same kind of things. So that's why we visit, we go there and we hear what they have to say, but then we come back and we clear our head of the noise. And I think it is easier to make decisions that are a little bit different because we're, we're kind of away from that noise. We don't have CNBC in our office. We don't want to be listening to that. We think it's, it's, it's just add stress to your life. And frankly, actually, the traffic there is worse. So I like the fact I have no traffic in Cleveland.

Chaya Slain [00:30:24]:
Reduces my stress.

Jeffrey Stern [00:30:26]:
Yeah, this is sort of a meta question, but you kind of have a, this rare vantage point, I think, both investing in entrepreneurs ultimately, and then becoming one yourself. And what you feel you've learned about entrepreneurship from investing and what you feel you've learned about investing from entrepreneurship.

Chaya Slain [00:30:48]:
Okay, that's interesting. Um, so it's funny. I definitely, I, I, I feel like I'm a, I feel like I am a better investor as an entrepreneur than before. Before. I think I'm better now. And I would say that, I would say that it's just different. And obviously I had my little Columbia deli experience. That's like one thing.

Chaya Slain [00:31:16]:
It's different to really start an investment firm from scratch. It's a different kind of perspective. So first of all, to the extent that we work with sponsored private equity sponsors or venture capital funds, um, we, I just feel that the empathy is different. You, you can try to listen and understand. There's certain experiences I say in life, like until you've had this experience, you, you just don't know what it's really like. And so you don't know the challenges that can be faced. You don't understand the distractions that can come up. And so definitely that has given me a degree of empathy that I could never have working for someone else.

Chaya Slain [00:31:53]:
Um, in terms of the kind of questions, understanding what it means, putting out fires. And I do feel a little bit and I think one of the things that I do well, and I didn't really touch on this at all, but I do think that I, because I said I love people, I really try to connect with the people. We try to find great partners. But having connections and so knowing the kind of questions to ask, I think is what is helpful for me as an entrepreneur. And then I would just say from a. You said, what is it like being an investor and now an entrepreneur? Not everyone has heard this term, but I call it long term greedy. And essentially what it means is really doing the right thing today because it benefits you for like the long run. And we look for people who think like this.

Chaya Slain [00:32:40]:
The idea is, is that when our ourselves as an investment firm and these are the kind of people that we try to work with, we've always looked for this, which is that when you meet an investment firm and you meet that entrepreneur, you can ask the right questions to find out pretty quickly are they trying to be a great investor or are they trying to build a great firm where they can generate their wealth because they have this huge firm and you want to be investing with someone whose goal in life is to create a great investment firm. You don't want someone who says, I'm just trying to like gather assets and have a lot of money. I think those people basically say, who want a smaller. They're saying they want to be great investors. They know the money will come later. If you're a great investment firm, you people are going to want to invest with you and the money's going to come. You want to do the right thing and you want to be making money alongside your clients. And that's exactly who we are and who we want to be.

Chaya Slain [00:33:32]:
And we've seen that. That's. We think that's the best model from what we've seen. And so we're basically always thinking, first of all, I'M able to invest alongside our clients. We actually weren't allowed to do that at Parkwood. I don't know if they've changed it, but right at when I was there, you weren't able to invest alongside our clients. Now I can, and that's super exciting to me. I want to be great, do a great job for my clients.

Chaya Slain [00:33:55]:
And then I think that the firm, like all the rest of the stuff, figures itself out. How do you grow? If you're doing a great job and you have a great investment product and you do the right thing, everything else just falls into place. And that's what we've always looked for in an investment firm to like a private investment firm that we're trying to partnership. We're partnering with great private equity shops or great hedge funds. That's what we're looking for there on their end. And so we think that's what we're going to offer to our clients on our end.

Jeffrey Stern [00:34:22]:
So when you reflect on the evolution of the business over the last few years, starting from scratch to where you are today, I guess how do you break up what you feel maybe the chapters of building the company have looked like and with an eye towards the future, you know what, what you're excited about, looking forward to with regards to what comes next.

Chaya Slain [00:34:41]:
Yes. So I would say in the beginning we were very, very focused on the single family office piece for a few investors. And ultimately what we realized is a few things. First of all, many people came to us and they said, we don't need your help on the investing with our whole portfolio, we maybe we have something in place already internally with a lot of the other parts of the services that you provide. But we really want access to your deal flow. It seems that you have differentiated deal flow. How do we get access to it? Some people who maybe didn't hit like our minimum hurdle to get it be part of our investment, our family investment office, they would similarly say, I don't need an investment office necessarily right now, but I really want access to your deal flow. And so what we realized was that this was why we decided to create a fund business.

Chaya Slain [00:35:35]:
And essentially what that means is that we're doing a lot of work looking for great investment opportunities for the families that we work with. But many of these, there's an opportunity for others to invest alongside us. And so we can basically scale that piece of it while still providing very, very high touch service to our clients. So there's a limit on how many families we're going to work with. We Just we want to be able to be there for these families in every way possible. We work with them on their estate planning, we help them with on their tax side. Basically anything that they need will help us. We don't have that internally, but we'll look for partners to help us on that.

Chaya Slain [00:36:14]:
And we are kind of the liaison on all of those kind of things. So it's a lot, It's a lot. It's very fulfilling work to working with families. Every family relationship looks a little bit different, but we've found that many people are interested in some of the kind of tools that we've built for our family's portfolios on the alternative side and then we are able to offer them to outside investors. So in terms of our growth, we have a little bit of capacity to add on maybe one or two families, not more than that depends on. Each family is a little bit different in terms of how much it would be. But I don't know that we could take on too much more there. But I think that we have the ability to take on more investors on the fund side.

Chaya Slain [00:36:58]:
And so I see kind of that growth. But also I look also at the growth in terms of my own portfolio. Investing alongside my clients and watching that grow is I think another piece of that.

Jeffrey Stern [00:37:10]:
Yeah. How do you think about success and what that means to you and kind of underneath that you know your what, what you feel is driving you kind of motivation internally.

Chaya Slain [00:37:24]:
So it's a lot of the same things I've said already, but maybe I'll take a minute to just tell you what the word vertera means. It's a made up word. You won't find it in the dictionary. Yeah, it's meant to, it's meant to sound like virtuous and virtuoso which mean excellence and integrity, which are our two core values. And I think that for me success would be to have a firm with that where the brand is, the reputation that we have, that our name reflects who we are and how people know us. So really having excellent performance and being trusted advisors where people feel that they know that we're on their side, we're trying to do what's right for them and knowing that if we do what's right for them and help them deliver great investment returns, that we'll all win in the long run. And to me that's what winning in the long run for me will look like.

Jeffrey Stern [00:38:19]:
What do you feel have been the biggest challenges for you along the way? And building Verterra.

Chaya Slain [00:38:29]:
They often say your Greatest strength is your greatest weakness. I think that doing things differently is hard. And I think that when you decide that you're going to do something different, it basically means there's going to be a period where you're going to look good and there's going to be periods where people scratch their head and say, why are you doing this? I mean, here's like an interesting thing to think about. I often think about a podcast I heard with Jeremy Grantham from gmo. GMO is a very large asset manager based in Boston. You may or may not have heard of them. And basically they are, they're very value driven. And they launched their firm in the 90s and the market kept getting more and more expensive in the 90s.

Chaya Slain [00:39:14]:
And they were, and I always, I always had thought, like, how do these people, like, what are you going to do? You basically say, the market's expensive. I'm not investing in the market. Well, if the market then goes up another 30% the next year, you're going to, your investors are going to say like, why are you not up as much as the market? And then you say, oh, it's going to crash eventually. It's so expensive, the next year it goes up again more. And I wondered what happened to groups like that. And this is gmo, I found out, and I might be quoting it, not exactly right, but if I recall correctly, he said that their asset level went all the way down to 40 million by March of 2000 when the market crashed. And then from there, of course, they meaningfully outperformed because they were invested in value in 2000, 2001, 2002. It did great.

Chaya Slain [00:40:02]:
And then they, they actually avoided some of the more expensive things in 2008. They did well and they're a multi billion dollar firm and so they're doing just fine now. But those beginning making a decision to be different, there was very hard. And there are moments where we do make decisions that are different. And that means that there could be short periods of time where your performance doesn't look as good as the market. And so that's something that I guess I didn't realize how hard that was going to be. There's kind of two layers to that. There's your own conviction that I know I'm doing right, I know this is the right thing to do, but also convincing your clients and investors this is the right thing to do and we are positioned correctly.

Chaya Slain [00:40:46]:
And I think the thing that I've learned is that there's never enough communication and then also education. We Just it's something you need to work on all the time. And I think hopefully it's also the trust piece that goes over time, that if people see over time that there could be periods of where you might be underperforming the market, but that over the long term you're protecting your clients, I think that that's the way to do it. And so I would say that was definitely, that was a piece of the challenge that I really had not anticipated when I first said, okay, I can do this, I can, I can be great, even if it means being different.

Jeffrey Stern [00:41:24]:
Yeah, I think it requires that. I like that long term greedy concept because, you know, you have to contend with the market being irrational longer than you can be solvent, you know, as Munger had always talked about. And so you need, you need alignment.

Chaya Slain [00:41:41]:
Exactly, yes.

Jeffrey Stern [00:41:43]:
What do you feel contrarian about today?

Chaya Slain [00:41:47]:
So I wouldn't necessarily say that I have any, like I said, I don't necessarily want to be contrarian, just to be contrarian. But I would say that there's definitely some concerns right now in the market in terms of uncertainties. So there are, there's like a laundry list of things that you could be worried about. You could be saying, is AI too overpriced or am I not investing enough of my money in AI And I'm going to miss it. There's so much debt that the government is just printing debt, printing treasuries. And are we in a period of fiscal dominance? And so are the US Dollar is going to lose value? There's all this geopolitical uncertainty. Are we at war with China? I mean, the list literally goes on and on. In some ways it's like, oh, we're in an interest rising environment, inflation.

Chaya Slain [00:42:34]:
I mean, honestly, I could keep going. Like there's a lot of things to be worried about. And so what I would say is that what we do differently is that the way we construct, like on the public side, we construct portfolios so that they are robust to any outcome where we don't try to figure out what is going to be. We basically say, how can we construct a portfolio so that it does okay in inflation? It does okay when interest raises it, it does okay when volatility spikes. And just putting anything bad that can happen into the volatility spike category. And we do have investment vehicles that are, that we have for our clients and we have for other investors that are well suited to basically navigate those kind of environments. And so I feel excited because I feel like we're ready, like we can Throw anything at my way and we can do it. And part of the reason is because we have a different approach to what we're doing.

Jeffrey Stern [00:43:37]:
When you reflect on the whole journey thus far, is there something that feels particularly important that we haven't talked about that you wish we had?

Chaya Slain [00:43:46]:
Well, I would say one thing that maybe we didn't talk about so much is portfolio construction. The importance of portfolio construction. I think that that's something that maybe we do a little bit differently. And then also I would talk about a little, a little bit about just alternative investments in general, I think. And maybe that kind of goes to like the past question you asked about contrarian. It's not so much contrarian. Like this moment, like, what are we doing different? This moment I'm seeing like there's a trend right now in the market where a lot of investors have heard how important private equity and alternatives are in their portfolio. And they're, as a result, they're starting to be made available to many different investors, to retail investors.

Chaya Slain [00:44:34]:
There's a lot of products out there, and I think that I would just say buy. Buyer beware on, on some of those products with, within an alternative space, there's, there's a very big dispersion. It's kind of interesting when you look at stocks and bonds. I think most people, many people invest in index funds and I think those can actually serve a great purpose. And there's not a lot of difference between one large cap equity investor versus another. They're going to be driven a lot by some of the, just how that market is moves around. But if you look at the dispersion between one private equity fund and another private equity fund, or one venture fund and another venture fund, they're real estate investors too. There can be a very big dispersion between those.

Chaya Slain [00:45:21]:
And so it's not, I don't think it's the same as like buying, buying an index fund when you're investing on the alternative side. And I would even say that, I think that, I think that that's one thing that we do that's a little bit different is that we're not necessarily investing in the names that are household names. Sometimes the names that are the best names are the ones that not everyone knows often because some of them are closed to new investors. Some of them are capacity constrained. So it means that maybe, you know, these are funds that the maximum that you can put in These funds are 200 or 500 million. If you got much bigger than that, you, the, the returns would actually degrade and so very large asset managers just don't look for putting those things in their clients. They're really. These are also.

Chaya Slain [00:46:09]:
Sometimes the best fund managers are closed to new investment. And so I think that we, we really try to find the best opportunities, not necessarily the ones that are the biggest, that are the most, most well known. We're not necessarily investing in names that are household names because like I said, a lot of the times, the ones that we think are the best are the ones who say, I'm not trying to build the biggest asset management firm, I'm trying to build deliver great returns. And that might mean we're going to close our fund when we hit 400 million because if I raise more money than that, I'm no longer going to be able to invest in the lower middle market. And if you are not investing in the little market, then you're investing in a different strategy in your next fund. So I think that that's also what is really unique. I think it's not necessarily contrarian. It's more.

Chaya Slain [00:47:00]:
That's like what makes us a little bit different than some of the other. Some other investors.

Jeffrey Stern [00:47:05]:
Yeah. Well, amazing. And I think we can work to bookend it here then with our traditional closing question, which is for a hidden gem in Cleveland.

Chaya Slain [00:47:18]:
Sure. So one thing I didn't mention about myself, nothing to do with investing, is I actually love nature. I love the outdoors. And Cleveland, you might say, is not, it's not like known like Colorado is the place you go to be outdoors. But I think there are some things that are worth mentioning. First of all, Cuyahoga Valley national park is, I mean, some of those hikes show up on some of these national websites for great hikes. But one that I would say was a favorite as my, as a child and now continues to be a favorite for my kids and I love going with my kids is Nelson Ledges. Nelson Ledges, Kennedy Park.

Chaya Slain [00:47:55]:
I don't know if you've ever been there. It's not Nelson Ledges Quarry Park. It's right next door. And it's really cool because it's just this little strip. But what makes it really cool is that there's like boulders that you can climb up and there's tunnels and like these little tight wedges that you're going through and caves. And when you're a kid, you just like, you feel like you're like a pioneer, like trying to discover the world. And it was fun going there as a kid. It's fun going there now.

Chaya Slain [00:48:26]:
It's still fun as a mom. It's fun watching my kids do it, you know, throwing out my through their eyes. So I think it's really. It's really a special place. But in general, I think that the outdoor opportunities in Cleveland are underrated.

Jeffrey Stern [00:48:40]:
Yeah. That also certainly resonates well. Amazing. I just want to thank you again for taking the time, sharing a little bit of your story and perspective and philosophy and all that. Grateful we finally were able to make this happen.

Chaya Slain [00:48:55]:
Thanks, Jeffrey. This was great and I'm really grateful for the opportunity and great to spend time with you.

Jeffrey Stern [00:49:01]:
You as well. If folks had anything they wanted to follow up with you about or learn more about, where would you point them online to learn more?

Chaya Slain [00:49:11]:
Yes. So I'm on LinkedIn. Also, we have a website, verterapartners.com so those are probably the best ways to reach me. And from the website you can send me an email and be able to follow up with you directly that way.

Jeffrey Stern [00:49:25]:
Perfect. Well, thank you again.

Chaya Slain [00:49:27]:
Thank you.

Jeffrey Stern [00:49:31]:
That's all for this week. Thank you for listening. We'd love to hear your thoughts on today's show, so if you have any feedback, please send over an email to jeffreyofthelandfm or find us on Twitter oddleayofteland or SternFajefe. If you or someone you know would make a good guest for our show, please reach out as well and let us know. And if you enjoy the podcast, please subscribe and leave a review on itunes or on your preferred podcast player. Your support goes a long way to help us spread the word and continue to bring the Cleveland founders and builders we like love having on the show. We'll be back here next week at the same time to map more of the land. The Lay of the Land podcast was developed in collaboration with the UP Company LLC at the time of this recording.

Jeffrey Stern [00:50:15]:
Unless otherwise indicated, we do not own equity or other financial interests in the company which appear on this show. All opinions expressed by podcast participants are solely their own and do not reflect the opinions of any entity which employs us. This podcast is is for informational purposes only and should not be relied upon as a basis for investment decisions. Thank you for listening and we'll talk to you next week.