Hello David, it's nice to see you.                   
Hello. See you.

So we've been given the mandate to discuss the state of the private equity industry, and certainly, this is not the first time we've had a chance to do this, and I know I've got some questions for you. I'm sure you have some for me as well. I'm thinking back to one time we sat down right before the global financial crisis. I've forgotten whether it was London School of Economics or somewhere like that, and we were talking about all the warning signs in the industry at that point. I'm curious as to how you think about where the industry is at today having seen so many booms and busts over the years.

Well, Josh thanks very much for asking that question. You're right, we have done this before and I would say in previous cases where I was concerned, there were good indicators that things were in XS. Here it's hard to say it's in XS in quite the same way that we might have seen in it 2008 and 2009, but prices are very high. Traditionally in the buyout world 20 years ago you'd pay seven, eight, nine times cash flow or EBITDA for a company. Now, reputable companies are paying 20 times EBITDA for written buyout, in some cases more. So you have to say, can you justify it just because interest rates are so much lower that you can pay these higher prices? Now, there hasn't been any big problem in recent years because people have been buying these things at high prices, selling them to people at higher prices and making profits, and everybody seems to be happy. You just have to wonder whether at some point somebody's going to say, 'This can't keep going on forever.' You have to ask yourself, what are the precipitating events that will make somebody say, 'We've got to take the punchbowl away?' I suspect it's increase in interest rates, an international global crisis of some type, or just generally a concern in the US government that this area should be regulated more than maybe it is, and therefore that puts a crimp on something. So something will probably happen. I can't predict what it will be; increased interest rates, international crisis, more regulation, that will make people pause a bit. Right now, everybody's a genius; everybody loves private equity and nobody's criticising private equity, maybe for the first time in quite some time. Though I would note that just in the last couple of days, the chairman of the SEC, Gary Gensler, did make some comments to the effect that he thought that private equity fees were not being fairly disclosed and that maybe their government should do more to be certain that there's greater transparency with respect to the fees that private equity people are charging. That, I would say, is a bit of a shot across the bow because the government has basically been leaving private equity alone for the last number of years. We haven't been heavily criticised or overly regulated.

Yes. I guess one interesting thing to think about is to what extent is just a multiple of EBITDA the right metric to use. In particular, I think about the increasing representation of technology and growth firms. Even in the portfolios of mainline private equity groups that traditionally did middle bending deals. You might say in that setting perhaps a multiple of EBITDA is a little less, just a linear extrapolation saying it's 12 or 18 and it used to be seven is perhaps a little misleading in that sense.

Well, many of the deals that are being done by large private equity firms, midsize and smaller ones are so-called growth capital deals where you're either buying on a buyout basis a company that has high growth potential, it's a tech deal and so forth or you're taking a minority stake in a traditional growth capital deal. In many cases people are valuing these things not as a multiple of EBITDA because those multiples will seem very, very high by traditional standards, but they're looking at them as multiples of revenue, which are also high too, but sometimes it's thought that maybe multiples of cash flow or EBITDA isn't as relevant as multiples of revenues. Also, what people tend to do is in the old days you used to say, this is a percentage. The multiple of EBITDA last year was seven times. Now people tend to say the multiple of EBITDA three years down the road is seven times. In other words, they're using forward numbers to lower the EBITDA multiple to make it look reasonable. Maybe that's okay, maybe not. As Warren Buffett famously has said, when the tide goes out we'll see who's swimming without a bathing suit on. At some point, some people may say that these prices are just a little bit too high and maybe there's a pullback. We don't know what the pullback is going to be, and so I'm participating in the investment committees that are proving these deals. We raise concerns, but it's hard to say that when all your competitors and your peers are rushing to buy these same companies, are they so much less smart than you are in knowing what they're doing. So there's kind of a rush to get deals done. We also have seen this phenomenon that you're familiar with now, that it used to be the case you had a buyout fund or venture fund and you raised it and then five years later you go raise another fund. Now people are deploying the capital so quickly, so quickly that people are going out and raising new funds a year and a half after their previous fund because they deployed the capital so quickly they don't have any real exits from the prior fund, but they have multiples of equity on paper returns. In other words, they would say the company's worth more on paper but there's no real exits. People are able to get away with this, so I can't say that they're wrong and I'm right, that it's a little bit of concern. Everybody is private concerned, but nobody is prepared to say right now, 'I'm going to stop investing for a couple of years and wait for things to slow down.' We'll just see. Maybe it is the case that interest rates won't go up that much and the markets won't get scared, we won't have undue regulation. Maybe there won't be an international crisis, and maybe there'll be a very, very soft landing. History suggests that landings that are very soft don't come all that regularly. When something bad happens it tends to be a little bit a harder landing. Let me ask you a question. The best indicator to me of where the markets are often is what do the students want to do? They're very smart. So you teach a lot of smart students at Harvard Business School. Are they rushing into private equity or are they rushing into entrepreneurial ventures where they're starting their own companies? What do people really want to do when they graduate from Harvard Business School these days?

Yes, it's a great indicator. It's not always clear that it's the, I'm not sure whether it's an indicator always to buy or to sell in the sense that I remember the class of 1999, the single largest employer was a company called CMGI, which was some sort of internet accelerator that went up 18 months later in a puff of smoke. It's a technical indicator that we may have to regard with some caution. I guess looking at my conversations with students, you see a couple of things. First of all, it is clear that the appeal of Silicon Valley and the entrepreneurial business whether ones they want to start themselves or going to work for something that's perhaps five years down the road where they can learn lessons that will hopefully position them well for founding their own company has really increased quite dramatically. It's certainly not everyone, but there's a very significant population where that lure of the valley is there, and clearly some of the success that students over the last few years have had in terms of raising venture financing and self-worth have really had a bit of a contagion effect in terms of getting people excited in this area. With that being said, it is also clear that venture especially, but also PE still has a real lure in terms of a significant chunk of a student body. If it was anything that really has changed over my years at the school, it's basically been the disappearance of student interest in investment banking. Maybe that partially reflects the fact that that was always a necessary stepping-stone to private equity and now it seems that they can just directly leap over there. That's really been the single largest discontinuity in terms of student taste as well as the appetite for entrepreneurial businesses.

One thing, I'm not seeing a huge amount of students, go ahead.

I'm asking another question about students. As you know, in the investment world today, everybody seems obsessed with cryptocurrencies. Everybody's buying them, selling them, talking about them. Are students as obsessed with crypto, and are people going to go into the crypto industry, or is that just something that Wall Street cares about and not students?

Well, it's an interesting question. I have a sense that a lot of people have it in their personal portfolios, I'm afraid alongside a few meme stocks as well. I was just talking to a student yesterday who had spent a couple of years working for a venture firm doing a lot of crypto stuff before business school, and I was asking the student saying, 'You're one of the few who is in on the ground floor here and are in a position to go out and really do amazing things for having really understood this industry.' The student responded, 'Well, I'm going to go work for Bane and Company instead,' which was not, I guess it's inspiring at one level, but it suggested that at least this person's taste for risk was not quite such to go all in on the crypto side. So I think there is a little bit of risk aversion, at least when it comes to career choices to really going all in on that option, at least for a lot of the students.

Josh, you've seen a lot of the larger private equity firms like mine go public over the years, and now they're some very large companies; Blackstone, KKR, Apollo, Carlyle and so forth. Do you think that trend will continue, or are we likely to see more people selling stakes in their private equity firms but not taking them public?

Yes. It's a really interesting question in terms of thinking about how this really plays out, because I remember when we did the case on Blackstone's IPO, which we were basically doing in real time, there was so much negative sentiment around the idea of a private equity group going public. Obviously not with Steve and his colleagues, but with many of the limited partners and investors we talked to in terms of saying, 'This is an arrangement that's going to be right with conflict of interest. It's not going to really work; it's going to introduce all these problems in terms of scaling.' It seems clear that it also brought, perhaps there have been issues in some cases. Certainly there's been frustrations over the years in terms of stock prices and do they fairly reflect valuations of these companies? It's hard to argue that the Cassandras were right. It seems that private equity groups have been able to successfully go public and retain people and succeed in doing attractive investments, and in many ways benefited from some of the presence of permanent capital. I guess an interesting question is whether this is really something that just works for the very largest groups or whether it will trickle down to smaller organisations. I guess the other side that I think about a lot is, what is the consequences of selling a stake
in one's fund? Ultimately it certainly seems that many of the investors ultimately have to achieve liquidity. At least, if one is dealing with a Dyal, for instance, as opposed to selling it a large sovereign fund which has a very long timeframe, is there in some sense some sort of impedance mismatch or discontinuity between having an investor who ultimately needs to achieve liquidity in a fund-type structure, as opposed to the long-run process of private investing? It's still an open issue, isn't it?

I think the largest private equity firms have gone public to monetise for the founders and also the create enduring companies that are going to be around for quite some time. The markets for private equity firms value things completely differently than the markets
for investing. In other words, if you want to go into a private equity fund, you're technically going to look at the track record of the fund and the expertise of people doing the investing. If you're looking at buying a stock in a private equity firm, you don't tend to look at the internal rates of returns of the funds that are being managed by that organisation. You tend to look at two things, for better or worse. One thing called fee-related earnings, which is to say the fees that are available after paying all the expenses and the management fees principally, not so much the carried interest, and you're also looking at the growth rate of the AUM, the fee-paying AUM. So you're looking at this private equity firms when they're public by different metrics than you look at them when you're looking at investing. It's an interesting dichotomy. Many of the smaller, I'd say smaller than Blackstone or Carlyle or KKR, firms have decided for the time being that selling a stake is actually a reasonably good way to monetise without having to be a publically traded company. I suspect you'll see more and more of that. The firms that are doing those investing kinds of operations, Dyal Capital being a very well-known one, they tend to have permanent capital vehicles, and so the investors in their funds can tend to get out and they don't have to hold out for that long a period of time. In other words, the funds investing in some of these kinds of things are not funds that are ten-year funds that you've kept a hold on for ten years before you can really realise your returns. Let me ask you, Josh, right now. I have set up a family office. I had what I call family office envy because everybody was asking me about if I had a family office and I didn't have one for a long time. I finally got tired of saying no, so I set up one and now it's actually pretty large and I've got a lot of people working in it and diversifying things. Everything has to be approved by Carlyle because I'm still a partner at Carlyle and a co-chairman of the board. I wonder whether you think family offices are now going to compete with private equity firms to some extent, or are they going to be the traditional kind of smaller organisations that aren't trying to do large deals themselves, but are basically just going into other people's deals. How do you see family offices playing a role now in the future of private equity?

It's a great question, and a really interesting one. Certainly on the one hand, you can argue that families bring a lot to the table, right, in the sense that there is, first of all they're investing their own money rather than other people's money. So all the kinds of things that you alluded to the SEC chairman, his concerns and so forth, a lot of those issues are clearly off the table. You also have a sense that if it works well, they're really investing for the long-term, right? They're investing for the grandkids and the great-grandkids, which we normally associate with an organisation like Harvard's endowment where we say Harvard's been around for 400 years and they're investing for the next half millennium. So in theory, family offices should be able to really do a tonne of stuff and do it well in a way that groups that rely on third party money, particularly with a fund structure would find more difficult to do. I guess the issue or the challenge that I've certainly seen is that, first of all at least usually it's not the family themselves doing the investment decisions or for families involved, they often don't have the kind of expertise beyond a narrow ambit. So they made a bunch of money in chemicals and they know a lot about chemicals, but unlike yourself, in many cases the principles don't really have that kind
of depth of vision, so a lot of the decision-making ends up being devolved to people they hire. They may be very good, but they also may be people who are looking to put some quick wins on the board and go on to the next thing. I was just talking to a family office earlier in the week where they've done an investment, it's two years in, it's generated a fantastic return, the team running the family office is eager to sell it to sort of demonstrate their success, and the family member is looking at this and saying, 'Isn't there a lot of future room for appreciation? Why should we be taking our chips off the table at this point?' I guess the second question is just simply one of, I think that one of the things that you can say about the kind of control systems that you have in place at Carlyle or the other big groups have is, it's really reflected the fact that you've learned a lot from mistakes that have been made, you know the right questions to ask and so forth. Sometimes with newer investors, but particularly with families there's so much enthusiasm, and
particularly when they get into areas like direct investing, often a bit of overconfidence that can lead to unhappy things happening. So I guess it's an on the one hand and on the other hand kind of answer, David.

Josh, for as long as I've been in the private equity world and as long as you've been studying it, there's been a subject raised in congress, which is relating to the taxation of carried interest of private equity professionals where they're getting capital gains treatment on the carried interest as opposed to ordinary income, and that debate is whether it's a fee for service or rather it's a risk, and so forth. Congress is considering tax changes now. We don't know which way it will go. Right now it's too early to say what will happen. In your view, if carried interest taxation as we've known it for many years changes, will it really dramatically affect the private equity industry? Will people not go into the industry? Do you think it will dramatically change rates of return and the quality of people in the industry?

Well, this may not be an answer that makes me very popular in the American Investment Council, but my guess is that it really will not have a huge set of consequences in terms of the industry dynamics, for probably two reasons. One of which is people in the industry are pretty smart in terms of financial engineering, and you could easily imagine that there are ways, and this is in fact something which a variety of difficult to read law review articles have talked about, that the industry may be able to invent around any kind of taxation by moving to more deal by deal structures, and so forth. Even so, I think that it's fair to say that you walk around most university campuses and you see large numbers of buildings with private equity principles names associated with them, including
yourself, thank you. In a way that really suggests this is just a pretty good business, certainly to be a general partner in, and it seems that even in a world where tax rates go from 20 to 40 or 45, it's still going to be a pretty good business and will still remain attractive.

So let me ask you relating to that question and that answer, you're obviously a very smart person, you know the private equity world inside out, upside down. You know the tricks, you know all the people in it. Have you ever been tempted to say, the salary of a Harvard Business School professor, even an endowed professor, is nice but nothing compared to what your students are making? Do you ever say, I'm smarter than my students, why don't I go into private equity, start my own firm or join a large firm? Have you ever been tempted to do that, and if not, what's the appeal of teaching private equity to young people who are going to make all this money?

Well, I guess I would answer that in a couple of different ways. I mean, certainly one is that it is a lot of fun, and I was doing this Spring one of I think what's probably Harvard Business School's first class geared towards undergraduates, which I did around entrepreneurship. One of the freshman basically ended up getting a number of venture partners to basically write him a $20 million cheque for his business. It was just great to see that process and his level of energy and enthusiasm and to sort of help out in it. Obviously, who knows where it goes from here? Just that level of excitement and interest is just very, it's just a tremendous amount of fun, certainly for me. Similarly, I think that being able to do the deep dives into some of these issues and really see the industry in a
way that few others can is also very, very fascinating. I guess the other side I would say is that I just recently wrapped up seven years running the entrepreneurship unit at Harvard Business School and I was just deluged with entrepreneurs and private equity people having made money saying, 'Now I want to go and do what I've always really dreamed about, which is teaching.' I feel in some ways that that was a little bit of a validation for my decision, if nothing else.

Josh, in most areas of economic life prices go down after some period of time as things become more efficient, people can make things more efficiently, cheaper, and therefore there's price competition and people tend to get things done more efficiently. Why do you think though, despite that phenomenon, the carried interest 20 per cent principle seems to be relatively inviolate unless you get 30 per cent? In other words, why do people not compete and say, 'I'll give you 19 per cent, 18 per cent, 15 per cent, 12 per cent,' why do people not compete on that basis?

This is one of the big mysteries in my mind, and I feel I've been saying for 25 years, 'This has got to be something that changes.' Just like in London we saw the big bang where brokerage prices came down and became much more competitive. We've got to see something similar in private capital, but we've really not, right? Clearly in some areas, like fund to funds, there has been much more price competition than was the case in the past, but certainly in terms of the list prices of traditional funds it's been much stickier in a very puzzling kind of way. I guess one thing I will say is that when you look at the sort of proliferation of what I like to call outside the box investments, co-investments, separate accounts and so forth, we see a lot of that activity taking place, and clearly, as a preferred limits partner, you'll likely get offered a bunch of opportunities which does to a certain extent average down the prices in a way that makes it sort of a hidden price cut, even if the list price in some sense stays the same. It's a great question.

I've said frequently that private equity is the highest calling of mankind. You agree with that?

I guess I wouldn't go that far. I guess I would give the priesthood or the [….] a little higher ranking than private equity. Shall we throw it open for any questions from the audience and see what they would like to ask us about?

Great, so thank you Josh and David. Really appreciate your perspectives on the industry. Yes, let's open it up now to Q and A from the audience. Please continue to ask your questions via the chat function. I think one great question to start off with would be around
ESG and how it's affecting the PE industry. So have you seen a shift in the types of companies that PE firms are going after? What are different strategies that firms are adopting to try and push ESG investing forward, also improve upon issues of diversity and inclusion? Curious to hear your thoughts.

I would respond. Go ahead.

Go ahead, David.

I would respond by saying for a while there was a concept of impact investing, which is to say you were going to invest only in companies that had really good ESG metrics and were doing really great things for society, as measured by almost anybody. That has now shifted to the world where every company is going to be improved by some ESG metrics, and so firms like mine have ESG teams that go and do due diligence. They try to figure out how they can improve the ESG metrics of the company if they buy it, and then ultimately if they do buy it, they actually go ahead and try to implement it. I wouldn't say any companies are off the radar screen. Obviously oil-drilling companies may not be ones that ESG people who are focused on that are dying to buy. Most companies you can probably improve the ESG metrics of them, and so I would say most deals are on the horizon and then you just have the teams of people at these private equity firms who are going try to improve the ESG performance of these companies, and therefore they're not going to put them on a shelf and say, 'We're not going to look at those industries,' because there is a confidence that they can actually improve the ESG performance of these companies in almost any industry.

I think in a way the clearest challenge is when it comes to figuring out how to measure this in a consistent kind of way, because in some sense one of the challenges that I've seen when I've tried to help groups try to measure some of this is that often this is a chessboard which is a three dimensional chessboard. There are a lot of levers that can be pulled. Some may deal with employment, some may deal with environmental, some may deal with things that provide various kinds of social benefits. In a way, capturing that in a single number is pretty challenging. It's clearly an area that's getting an enormous amount of attention today.

In that regard, I would just add that Professor Sharpe got a Nobel prize for coming up with the Sharpe Ratio, and if somebody's going to come up with a Nobel prize and deserve one, if they can come up with an ESG equivalent of Sharpe Ratio where one number basically gives you the indicator if its ESG performance, that is in the works actually, and people are working on it. I suspect in the next five or ten years we will have a system where people will look at a company and say its PE ratio is this, Sharpe Ratio is this, and its ESG ratio is this. That will be the ESG indicator that everybody will use.

I do think it's, maybe I'm not quite as optimistic as David there in the sense that, the challenge in some senses you look at, let's say a company like Uber. You say, this is great. It's creating a lot of jobs for people who want to work part-time, or at least it did prior to the pandemic. It gives people a kind of autonomy over their own hours and so forth, and has a lot of, inasmuch as people substitute taking Ubers for riding their own cars, you might say it's environmentally enhancing as well. At the same time, clearly there is the side of it of saying at least pre-pandemic it seemed like one out of every three cars in Boston was an Uber circling around for their next job, and what the implications of that for urban congestion are, and so forth, is pretty tricky as well. It does seem like it's a lot more complicated than figuring out what the variants or the correlation of a stock is in some ways here.

Great. Our first talk today was around cryptocurrencies and you mentioned cryptocurrencies in your chat earlier. So I guess, what are your thoughts on whether private equity has a role to play in the development of crypto as an asset class, or at least in terms of digital infrastructure?

There are two different aspects. One is whether private equity firms can help improve the industry by making it more transparent, finding companies that service the industry and so forth. Private equity's already doing that. I have in my family office invested in companies that help service the industry. I think the industry isn't going away. That's a different kind of investment than actually investing in the cryptocurrencies themselves, because that's a completely different type of thing than a private equity, at least in my view. I do think the private equity industry goes where money is being allocated. Money's being allocated in the cryptocurrency areas, and things that service the industry, things that make the industry work more efficiently or enable people to invest in it, that's
going to be a very attractive area for a lot of people, because you see so much money going into the area. I do think there are a lot of venture firms that are now specialising in cryptocurrency related things, block chain related investments. I think that's going to continue for quite some time.

Yes. I think the real analogy here is to the internet in the 1990s, right, where the pickaxe and shovel strategy was just so tremendously successful during that period in terms of internet infrastructure that it's likely that for the first few years that's really where the opportunity's going to lie. Then beyond that, one gets into the equivalent of web 2.0 where it's a much more active involvement. At least initially it seems the infrastructure is really the place where the opportunities are going to lie.

Another question, and I might initially direct this at you, Josh, because I think you have a paper on this and I've been doing some work on it recently. A potential challenge for a lot of PE firms is the transition from founders to the next generation of leadership. What are some of the challenges there? How do you think it's getting addressed? I would love to hear your thoughts.

Well, as you said, we did do a recent piece on this I did with Diana Noble in the UK. There are some things which are striking, right, which are when you look at the baselines of entrepreneurial turnover or newly public companies and so forth, clearly private equity, the turnover rate is much slower, that people tend to stay at the top for considerably longer than what we see, even for very successful entrepreneurial businesses. In other words, the Bill Gateses and the Zucks are really the exceptions in the entrepreneurial realm, but much more the norm in the private equity world. I guess for me the most striking thing that we did see, and we did a lot of interviews of both limited and general partners around it is how firm specific the transition process was, that it seemed like this is not something where it is coming off of a template of, this is how one handles a transition. Almost every organisation seemed to have its own path here; the old line about no happy families being alike and so forth, to reverse it. There did seem to be a lot of idiosyncrasy in the process that maybe reflects the youth of it. David, do you have any thoughts there?

I would say private equity firms are different than other kinds of firms in many respects, because very often the private equity founders still own gigantic stakes of these firms. So it's been harder for them to say, I own 30 per cent, 40 per cent of the company collectively with a couple of founders, and we're just going to go into a vacation retreat and let billions of dollars be managed by people without having any involvement. So that's one of the challenges, that the private equity founder still owns so much of these companies and that's one of the reasons why you see people like me in their seventies still hanging around the firms that we started. Henry Kravis, George Roberts, Steve Schwarzman and Bill Conway, myself and others are still involved in these firms, maybe in different roles than we had in the beginning because we own so much of it still and so much of our net worth is tied up in it. I'm not sure it's an ideal situation, but that's the reality. It's hard to walk away when you've still got billions of dollars at stake.

It's interesting the differences between the venture world and the buyout world in this regard. In some sense, venture is clearly an older industry, even though it's a smaller one, and there it's sort of been more the model, not universally, but certainly much more likely to see the sort of naked-in, naked-out kind of model of saying founders should just walk away and hand the firm off to the next generation. In a way, it may well be that the kind of monetisation that we've seen in the private equity side will spill over to the venture world as time goes on as well.

Remember, the amount of money now being involved in the venture world is staggering. For example, Sequoia, I suspect now that you have so much money involved and it's a publically traded kind of vehicle, that it's less likely that some of the senior people are going to walk away from billions of dollars that they have at stake than they might have ten or 15 years ago. At least that's my view.

Yes. In some sense it was a much simpler process when it was a world of hundred million dollar funds, and perhaps $30 million of carry you were walking away from.

You're right.

Switching gears a little bit to private equity geographically. So private equity still remains pretty US-centric. What are your thoughts on private equity outside of the US market? Do you think it'll remain US-centric? Do you think it'll expand more and become more successful in other regions, like emerging markets? Maybe David we could start with you.

Well, roughly two thirds of private equity dollars are still invested in the so-called developed markets, which is to say Western Europe, Canada, United States, Japan and Australia; two thirds or more. That's not going to change as much as I once thought it was going to. I did think the emerging markets would emerge more significantly in private equity, but because of currency challenges, because of rule of law, because of I would say exit opportunities being more scarce, the quality of managers being more scarce, corruption related things, emerging markets have proven to be much more challenging for private equity. A good example is Brazil. Many people have over the last 25 years thought that Brazil was going to be the great next private equity market, and then when people poured in, the currency went down. So it's been very difficult to exit profitably from Brazilian investments if you've invested in dollars, let's say, initially. So I think the emerging markets will not be quite the panacea that we once thought ten years ago or 20 years ago in private equity. They will gradually increase, but I still think that for the next five to ten years at least, the US will still with Europe dominate the private equity markets in terms of the being the capital for it, but also where the deals are going to be invested.

I think the one exception one could point to until at least recently was the Chinese venture space, which clearly had done, not only started a lot of great companies there, but also had generated very nice returns for not just Chinese investors, but for many global investors who were early into the Chinese venture sector. Certainly I think today the combination of some of the tensions between the Beijing and Washington, as well as just simply some of the crackdown on various industries within China, have certainly made that a harder industry to be quite as optimistic about for the next ten years as it was for the last ten years.

We have a couple of minutes left here, so maybe time for one more question. We're now heading into the third winter of COVID. Hopefully things are improving, but I guess what are your thoughts on the lasting impact of the pandemic to private equity? When COVID hit, I think

most people thought that private equity would be damaged in some ways like other industries were damaged. It turns out it was the greatest growth period of ever for private equity in terms of funds being raised, capital being deployed, returns being achieved. It's just so hard to believe. Who would have thought this would have happened? I think the more lasting effect on it though will be the concept that you don't need to be in your office five days a week to be a private equity investor, to raise private equity funds, to do private equity deals. So I just do think that the private equity world, like the other parts of the business world, will probably adjust their working habits and you'll see more and more people working remotely more than you ever would have expected.

Yes, I think you look at some of the fundraising process and how groups have been able to raise enormous amounts of funds virtually in what was normally this extremely inefficient grinding out process, and it's hard not to think that some of those lessons learned or the sufficiencies that were gained will continue to manifest themselves going forward.

Great. We're at time. Thank you both so much for your perspectives. You've given us a lot to think about, so thank you David and Josh. Thanks for your time.