Why do Harvard and Yale seem to be exiting private equity? What does the most rigorous data actually say about buyout and venture performance? And how should serious LPs think about real estate, hedge funds, and co-investments?
In this episode, I’m joined with Steven Neil Kaplan—Professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business, co-creator of the Kaplan-Schoar PME metric, and one of the most widely cited academics in private equity and venture capital. Steve breaks down decades of private market performance data, busts myths around IRRs and overmarking, and gives a rare, honest evaluation of asset class performance through multiple cycles.
This conversation is a masterclass in understanding what the real numbers say—direct from the person who helped shape how performance is measured.
Highlights:
- Why Harvard and Yale are selling private equity holdings
- What the best vintages in private equity have in common
- How the Kaplan-Schoar PME and Direct Alpha work
- The truth about buyout returns vs. S&P 500 and Russell 2000
- Steve’s candid take on Ludo Phalippou’s critiques
- Which asset classes he’d avoid if advising an endowment
- What really drives fund overmarking and fundraising timing
- The persistence of venture capital fund performance
- Why co-investing can meaningfully boost LP returns
- Steve’s advice on investing through cycles and downturns
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Guest Bio:
Steven Neil Kaplan is the Neubauer Family Distinguished Service Professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business. He co-founded the entrepreneurship program at Booth and is a research associate at the National Bureau of Economic Research. Kaplan is one of the most published and cited academics in private equity and venture capital, and co-developed the Kaplan-Schoar Public Market Equivalent (PME), a widely used tool for comparing private equity returns to public markets. He has consulted for top private equity firms and advised institutional investors on strategy and fund selection.
Our Podcast now receives more than 300,000 downloads a month. Are you interested in sponsoring an episode? Please email David Weisburd at david@weisburdcapital.com.
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Stay Connected: X / Twitter:
David Weisburd: @dweisburd
LinkedIn:
David Weisburd: https://www.linkedin.com/in/dweisburd/
Steven Neil Kaplan: https://www.linkedin.com/in/steven-kaplan-69594718/
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Questions or topics you want us to discuss on How I Invest? Email us at david@weisburdcapital.com.
(0:00) Episode preview
(1:42) Private equity performance vs. S&P 500 and data sources
(5:07) Standardization issues and biases in private market data
(8:18) Dividend impact and criticisms of private equity metrics
(12:03) Predicting future private equity and alternative investment returns
(19:34) Correlation between public markets and private equity
(22:28) Private equity manager marking practices and customer service importance
(29:48) Investor strategies and fee structure implications in private equity
(31:51) Comparing large and small buyout market strategies
(33:03) Adding value in private equity and challenges in exiting mega deals
(37:16) Traits of successful private equity students and investment timing
(41:48) Market cycles: Predictions and investment strategies
(45:11) Benchmarking venture capital against public markets
(47:08) Venture capital performance variability and return statistics
(51:13) Closing remarks
