Keep pulling the thread on Rob Wallace.
Upon taking leadership, Rob Wallace drastically reduced the number of external partners from 300 to 85. This reflects a high-conviction approach, focusing capital with managers where the endowment has strong alignment and believes in their superior judgment.
AI is framed as the most important investment opportunity and, simultaneously, a major source of potential instability. Wallace notes that AI will disintermediate some existing software businesses while creating new, profound opportunities across the global economy.
With a $50 billion portfolio, Stanford faces diseconomies of scale, particularly in early-stage venture capital. Top VC funds have not increased their fund sizes, making it difficult for a large endowment to deploy meaningful capital.
The endowment's purpose is to provide intergenerational equity, supporting current and future students and scholars. This requires generating a real compound return of ~6% (or a nominal 9%) to cover the university's 5-5.5% annual payout and offset inflation.
Wallace observes that the interconnected global economy is beginning to "Balkanize" and fragment. This shift requires investors to update their mental models for how businesses operate and where opportunities and risks lie.