Roland (00:00) We raised money in the markets as we went public. We raised a large bond offering and money in the process of going public. But to get to that point, Inventure invested below tens of millions to create a billion dollar business. ICEO Technologies (00:12) Roland Austrup is the chairman and co-founder of a $1.7 billion hedge fund and chief growth officer of Inventure, a public conglomerate listed on NASDAQ that creates billion dollar companies by using the uncommercialized technologies of multinationals. Roland (00:25) You're going through a market opportunity, then you're going through a technical validation of the technology that's developed. Then we have to go through the financial modeling and a go-to market model. And you have to answer one very simple question. Is this business providing an immediate, quantifiable, compelling and quantifiable value proposition that's going to compel adoption in the marketplace? And then the last stage, of course, is you're creating a ICEO Technologies (00:49) Given his hedge fund experience, Roland leverages the systematic processes learned to build billion dollar companies through in-venture. Roland (00:56) Those geopolitical risks can create opportunities because the larger companies that are impacted are going to look for things where they can get cost savings or where they can get an edge. And if we're providing solutions that provide both an edge and cost savings, we're providing a solution for geopolitical risk. There are always things in front of us that create worry. There are always walls of worry. But, you know, we tend to, we have a survivalistic instinct. We tend to find ways to come up with solutions to problems that we face. So I don't really focus on the worries, I really just focus on the opportunities. Diego Calligaro (01:29) Hi, Roland. Very glad to have you here. Roland Austrup (01:31) Thank you, Diego. It's nice to be here. Diego Calligaro (01:33) And you have an impressive background. You founded a Hedge Fund, now a value of more than 1.7 billion. Now you're a Chief Growth Officer of Innventure. So you have a lot to teach and I'm really glad to have you here. And let's start maybe from a more personal question, know, more motivation from your side. So tell us what drives you. as a leader and keeps you motivated. Roland Austrup (02:02) Well, that's a good opening question, Diego. You know, I've always been a curious person. I've always liked to build things. So, you know, what drives me is really just it's amazing seeing innovation around and it's amazing to see, you know, how we've grown through time, through history and how we've evolved. And it's just a great excitement to be on the cutting edge of innovation and progress. Diego Calligaro (02:27) Thank you. And tell us maybe how you got to Innventure, you know, from your, you know, from funding that Hedge found and then move into Inventures directly. Roland Austrup (02:38) That's a very good question, Diego. And I have to say, looking back at my career, I could never have imagined, you know, a number of years ago, getting here, which is an interesting part of the experience of life is that, you know, there's always forks in the road that you can take. And that's really how I got to Innventure was through the evolution of a career. I started in the hedge fund industry, as you mentioned, right out of university. And really, when you're in the hedge fund business and you're investing and you're looking at public markets, you see a range of opportunities and you meet a number of other people. And I met one of the co-founders of Innventure rather serendipitously. And that probably summarizes how I got to Innventure, serendipity. But I met one of the co-founders and we became very good friends and we simply shared ideas. He was growing Innventure. I had my hedge fund business and after a period of time running my business, I started it in 1996, I felt it was time to pass the baton to the next generation. So I was in the process of stepping back and being a corporate director of that hedge fund company. And around that time, Innventure was in the process of... evaluating ways to monetize the first business they created, which is a company called Purecycle Technologies, which is now a public company on NASDAQ. And Dr. John Scott, one of the co-founders called me up and asked for some assistance in my thoughts on that. And I helped them out with that, gave them my opinion on how to monetize Purecycle. And in that case, I thought that what they needed to do was go public. and dovetail that with a debt strategy that they were already working on for some municipal debt, I thought the two would complement each other. And the main reason for that is Purecycle has a significant opportunity in front of it. It has really the only technology to recycle polypropylene plastic. And when you look at the number of plants they wanted to build and the capex of those plants needs a lot of capital, I said, you you really need to be a public company. to attract that kind of capital. So they took Purecycle public. And while I was telling them my view of how to do that and making introductions to the industry to take them public, I said, you know, I think Innventure is a great business. Coming from a hedge fund manager's perspective, I said, in the hedge fund world, there's always this word alpha, added return for the same level of risk or risk reduction for the same rate of return that hedge fund managers try to achieve. I said, you you guys are really doing this in venture capital. And I thought there was a way to grow Innventure looking at the VC model. And as I mentioned, I was retiring and becoming a director. And I thought maybe they'd invite me to be a director. said, no, we want to. We want you to come here, join the company and help us execute that strategy you just described. So that's how I got involved. I joined them in early 2021. Diego Calligaro (05:27) Amazing, amazing. maybe before digging on the actual model of InVenture, how it works, can you tell us more about the underlying problem that is addressing and the lift opportunity of large R &Ds investing within multinational which are not leveraged? Roland Austrup (05:44) sure, of course. mean, there is a lot of R &D that does not get commercialized. Let me try to frame that a little bit. know, major multinational companies spend anywhere between 2 and 25 % of their revenue on R &D. And it's very important, as we all know, for a multinational to thrive and survive, you need to invest in R &D in order to be competitive, to improve your own product design. to enter into new markets. And there's evidence for that. There's evidence that companies with deep R &D budgets tend to have greater longevity, slightly higher rates of return. But the problem with multinationals is that they're very good at operating large businesses. Commercializing innovative technologies is an issue. So I think there are two ways I would look at it. Multinationals do a lot of R &D, as I just mentioned. And a lot of that doesn't get commercialized, but for various reasons, there's a myriad of reasons. You have budgets, so you have to prioritize. You have core competencies. And so sometimes multinationals will invent things that aren't part of their core competency. As an example, about 25 % of multinational R &D is R &D that is not focused on things that are the core competency of the multinational. And so they may not be the right party to commercialize that, but the end product would be of high value. And I'll give, again, I can use two examples of that. Procter & Gamble is a company that we have collaborated with to launch two companies, the first being Purecycle that I mentioned, which recycles polypropylene plastic. The second, is a company that we currently still own called Aeroflex, which is sustainable packaging. Procter & Gamble has very strong sustainability goals and that includes plastic reduction, greater use of recycled plastic, but they're not in the packaging industry and they're not in the plastic recycling business, but it's very important for them to see their products in more sustainable packaging. And they couldn't find solutions in the marketplace. So they invested in R &D. that resulted in a process to recycle polypropylene and in the sustainable packaging that we have in Aeroflex. So there's a good example where there's a need for P &G. They couldn't find a solution in the market. They invested in R &D, but they weren't the right party to commercialize that R &D. But what they wanted was that product in the market because they feel it's very important for them and their customers to hit those sustainability targets that they've created. So that's one aspect where I would say that we're solving a gap because multinationals do a lot of R &D, but they're not necessarily the ones to commercialize it. And for us, that represents an opportunity. For us, that R &D of multinationals is an ore body rich in gold, to use an analogy. Diego Calligaro (08:34) Okay. And what comes through that process from really identifying that opportunity, projecting or selecting need and then building that company? What's the actual process? Roland Austrup (08:45) Sure. the process, and that's a very good question because again, what I found very attractive about Inventor's model is they actually follow a very systematic, deterministic process before they create a company. And really what we're trying to do is we're trying to find disruptive or transformative technologies that are meeting an unmet demand in the marketplace. So the first thing we have to evaluate in our process is what is the unmet need that that technology that the multinational invested in is solving? So the first gating item we look at is what are the unmet needs in the market that the multinationals have? And we work with them and they're telling us what the unmet needs are and then they're developing a technology. So we have to first evaluate the size of that need. Are there other solutions out there in the marketplace or is the technology that the multinational invested there are indeed dollars in uniquely solving a problem that we can't see anyone else doing in the marketplace. So that's really the first step in our process is evaluating the opportunity, the size of the opportunity and whether or not this is a unique technology. Then we have to evaluate the technical merits of the technology. Does it work? Does it actually solve the problem? Can you scale it up? So you're going through a market opportunity, then you're going through a technical validation of the technology that's developed. Then we have to go through the financial modeling and a go-to market model. And you have to answer one very simple question. Is this business providing an immediate quantifiable, compelling and quantifiable value proposition that's going to compel adoption in the marketplace. There has to be a value proposition if you're going to expect the market to adopt a technology. And so that's what we have to do is the financial analysis of is the business model sound? Can we create a compelling value proposition such that we know it's going to compel adoption in the marketplace? And then the last stage is, course, is you're creating the companies. But when we start a company, we've already done that. We've done the technical validation. The technology is already being developed. We've sized up the market. We have the market data that comes from our multinational that we collaborate with. They have deep, deep marketing budget or obviously sales channels. So they know what's going on in the market. So we can use their data. We can do our own analysis. We can hire domain expertise. to further complement that. But that data is very, very, very important. And so the last step is creating the business. So when we've created a business, we've already gone through, as I said, all of those things, technical validation, market validation. And typically with the multinational that we're working with, we have an added advantage in the sense that that multinational company often assists us as either one of our first customers or as a channel to the market. So they're helping us get to the market. So you've mitigated many of the risks along the way in creating companies. And so we look at hundreds, I think to launch the first three companies, we looked at about a hundred different opportunities and rejected most of them because they didn't meet our criteria. Diego Calligaro (11:44) And how do you convince those multinationals really to dig on their data, their information? What's the need for them? It's like sharing equity with the multinational or profit? Roland Austrup (11:55) what's the economic arrangement with the multinational? It can go in a few ways and it has gone in a few ways. In three cases, the first two companies with Procter & Gamble and the most recent company we created with Dow, the relationship is a global exclusive license. With the third company we created, Excelsis, which is data center cooling, we acquired the technology initially and then built upon it. So you can acquire the technology, you can license the technology, and then the compensation to the multinational is a combination of minority equity and or royalties. on sales outside to them. But that's not the main reason, that's not the main way in which the multinationals are getting a rate of return. They're not really looking to get a rate of return on the dollars and cents they get from the royalties or from what we pay for a license or the acquisition of the technology. We actually tend not to pay a lot for them. The real advantage to the multinational is having access to the technology. That's where they get their rate of return. And they're not necessarily always economic. Sometimes it's sustainability mandates, but other times, of course, it's economic. because they want access to the end product and they feel that that can move the needle for them if they have access to it and can integrate it into their lines of business. Diego Calligaro (13:09) Okay. And what about the costs and the results? If you maybe can give us an example of a company that you built aligned to this process. How much have you invested in terms of value generated? Roland Austrup (13:22) Yeah, so I mean, the clearest example because it is a public company is Purecycle. So Purecycle today trades at a market cap in excess of a billion. We and our founders at Innventure invested tens of millions. Obviously, we raised money in the markets as we went public. We raised a large bond offering and money in the process of going public. But to get to that point, Innventure invested low tens of millions to create a billion dollar business. And that's really what we're looking to do. Our objective is to create businesses that have the potential to be billion dollar market cap businesses or more. Every company is going to be different. But on average, you could see that you're spending about 30 million per company to get them to cash flow break even. That might be a benchmark that you can look at. Again, some are going to be more. Some could be less. Diego Calligaro (14:13) What about the differences maybe with the other model, example, Venture Capitalist in which majority of the investment probably is going to be fail when they invest into startups. Maybe when it comes to your model, could you share with what are the main differences with the VC model? Roland Austrup (14:29) Yes, I'd categorize the differences in two ways. One, structurally, and the second in the investment process. And then there might be a couple of others. But structurally, how we're different, we are not, most VC operates under a GPLP structure. So they're private funds, GPLP structures, where you have a time to invest the money, you have an incubation period to grow the businesses, and then you have a realization period. So a typical VC model, you know, again, Private GPLP structure could take 10, 15 years to get your last dollars out. They take time, so they're illiquid. We're not that, we're a public operating conglomerate Innventure trading on NASDAQ. But if you look through Innventure, we're really a diversified laddered portfolio of the companies we've created. But structurally why that's different is we are a liquid vehicle for investors. People can come and buy our stock to get access to our entire portfolio. And if they want out, they sell the stock. So structure, were different. We operate as a public operating conglomerate versus the GPLP structure. The second difference is in the process that we follow. I would categorize traditional venture capital as a spread betting model where you can place a number of investments and money's fungible. You can see which ones are working out, which ones are not. And you can sort of you know, toggle your money in your future, your add-on investments into the ones that are succeeding and, you know, and that's good for investors because on a probabilistic basis, you're going to get a rate of return because a couple of winners are going to be really good. But the venture capital model counts on a couple of big winners. So 10 to 20 % of winners is all you need to be successful. So, and that's how traditional VC works. We don't work that way. We have a much lower throughput model. So we take more of a rifle approach. We still want to have a small diversified portfolio. We don't want to have all of our eggs in a single basket. We want to have a small portfolio of companies, but a manageable portfolio, we can manage our companies to all be successful. Our hope and our goal is that all of our companies be successful. Now, of course, that's a very ideal goal. But what we believe is that we can have a much higher potential of success, a much higher probability of success, not a 10 to 20 % success model. We want to flip that around where you can have 70, 80 % success stories by being very disciplined in the businesses you create. And there's evidence that supports this, by the way. I recall a Deloitte insight piece where they were able to demonstrate that structured commercialization models tend to hit commercial milestones, tend to be 30 or 40 % better at hitting commercial milestones. So there is evidence that you have a very systematic approach, you can increase the odds. So for us, our approach again, is how do you mitigate the risks in early company creation? that focus on, so the focus again on working with multinationals, and it's not that they necessarily have better R &D, but they have better data and their R &D is strategic and it's focused because they're saying where are the gaps, where are the needs? And so again, there are stats that show that, and I think I saw this one from MIT paper that shows that there is a 60 % less chance of technical failure. of innovations that come out of multinational R &Ds than elsewhere. So again, what we're focusing on is working with multinationals because we think they have very, they've spent tens of millions in many years based with their market data to develop solutions. So we think those solutions can have a higher probability of success, again, technically, and because they already understand the needs in the marketplace. What we're really focused on is risk mitigation, finding the unmet market need, avoiding the years and dollars of development of the technology and mitigating the technical risks, having that market data of the multinationals, having them as a collaborator that we can work with to be a channel to the market as well. So our process is very, very systematic and it's designed to reduce risk. So that's the main process difference is how do you mitigate those risks? How do you mitigate the technical risk? How do you mitigate the market risk? And how do you mitigate the channel or how to get to the marketplace? And the last difference in that is that we're not investing in other people's businesses. We're the owners and operators of the businesses we create. And that's an important distinction because it means that we're not spread betting, going back to what I said earlier. We are focused on a rightful approach where we expect to encounter challenges along the way, but we expect to solve those. Last two differences I would say that are important to mention. In the traditional VC model, you're investing in existing businesses. So usually those businesses have a certain valuation already. When we start a business, we're starting it from a zero basis. So theoretically, if you're starting a company from zero versus investing in a company that's already grown to a certain valuation, theoretically, you have the potential for higher IRs or multiples on invested capital because you own them from zero. Diego Calligaro (19:37) Okay. I wanted to touch base maybe on the main challenges that you have been facing like building this model as well. What do you see are the biggest roadblocks or the biggest risk along this process that you've been facing? Roland Austrup (19:52) Yeah, I mean, you always face challenges along the way. think, you know, there are several challenges that we face. One in the early days was how do you convince the multinationals that you're a good partner? And, know, you need a little bit of a pedigree to do that. I think for Innventure, you know, in the beginning, you know, we started with one collaborator that we were working with and that was Procter & Gamble. But they started endorsing us in the marketplace. They started talking to the marketplace. They took us and our portfolio companies to several conferences, innovation roundtable, to sustainable brands conference, to Davos as well. When you get like in any business, when you have a satisfied client or customer or partner or collaborator and you get references, people pay attention and that's really what happened. We had the success in creating the first business and taking it public. We had a reference from that and then we had our own outbound approach, but that drew a lot of other companies to us. So it increased the number of companies we're talking to, but that was an initial challenge. How do you convince the market that you have something that's truly differentiated? Second challenge you'll face is that anytime you're transforming an industry, or you're innovating, you're breaking new ground. There are no protocols. There's the unknowns in front of you. You have things that you don't know, but you have things, you know, you can end, in our case, when you're charting, when you're in uncharted waters, you just don't know what's in front of you. And so you have to be nimble and be able to react to those opportunities. The other challenge you face, of course, is capital raising. Anytime you're innovating, capital raising is one of the biggest challenges out there. And that's why we have a very strong capital markets team internally, happily, which I'm a part of, Diego. But it's always been a challenge in building new businesses, is attracting capital. And that's why many businesses fail. startups fail is they don't have an ability to raise capital. They assume that it's there if they have a good idea. So those I would say are the three main challenges that we faced was convincing the market that we had something that was differentiated because what we're doing is unique. We don't see anyone else that's doing what we're doing specifically in the marketplace. And then all the companies we create are transforming. you have to do that. The third company we created, Excelsis, is a perfect Perfect example of that. It's direct chip, two phase liquid cooling. There are only two companies that do that right now, us and one competitor. And we're innovating this, you know, for the longest time data centers were cooled with air conditioning and air conditioning can't cool the next generation of chips. So, but we're introducing a new technology, a new way to cool. And it's not just about what the technology can do that's differentiated, but how do you get it to market? Because the whole industry has to adopt what they were doing in order to incorporate a new technology. So you have to help them do that. And again, the last challenge being capitalism. Diego Calligaro (22:39) talking about capital, you recently went public on Nasdaq. Maybe share with us how was the day in which you went public, how you felt, and also why was there the right reason. Roland Austrup (22:52) Yes, the underlying reason for going public, again, is our overall strategy was to be a public operating conglomerate for a few reasons. One, as a private company, you're required to monetize your underlying businesses and to give your shareholders a rate of return, you grow the businesses, you have to monetize them somehow. You're kind of forced to monetize the businesses to give your shareholders a rate of return. We felt that by being a public company, We wouldn't be forced to sell businesses prematurely. We could finance them from our balance sheet. And our investors have liquidity for their investment because we're a public company. That was very important. We also felt that we could get a better valuation for our businesses as a public company. There are examples of companies in the marketplace that are conglomerates that are high. earnings per share growth conglomerates. And if you're successful as a high earnings per share growth conglomerate, you can get a premium valuation in the marketplace. So we've seen examples of conglomerates, you know, that trade at a premium to their net asset value of the underlying businesses because they, their underlying businesses are high earnings per share growth companies. So we felt for our shareholders, we could maximize the value creation for them if we're successful in creating companies. that can compound earnings growth that we consolidate. And we also felt operationally for Innventure, we were better off as a public company. Again, I mentioned that access to capital is difficult when you're pre-revenue and you're trying to build businesses. And so we felt as a public company with a commercial ramp, we would have a greater ability to attract capital. We also feel operationally there'll be greater visibility for our business. So it'll create more opportunities with multinational corporations. We'll have greater visibility, greater transparency because we're regulated as a public company. you know, people can evaluate us. There's public information, there's regulatory filings, published audited financials. And then we're also plugged into the investment banking industry. who work with multinationals. So we feel it'll create more opportunities that will come our way as well. More introductions, more &A activity for the companies that we create. We felt it was important to be a public company operationally. And as I mentioned earlier, it was the best way to get our shareholders a rate of return and allow us the flexibility to manage our businesses, not be forced to sell them to give a rate of return to our investors. Diego Calligaro (25:15) So yeah, definitely a lot of pros for going public. Could you share maybe from your side in terms of for a company that wants to go public, what do you think are from an external perspective those pros and cons of going public? Roland Austrup (25:30) Well, there's the biggest con of going public, of course, is that there's a higher cost. There's a cost because you have to, know, being public company, you're highly regulated by the SEC. So you have to be compliant and you have to have the infrastructure internally to manage being a public company. So there's a higher standard, I would say. And so there's a higher cost. both in dollars and in the personnel you need to manage being a public company. And I think that that has one of the reasons is of why you've seen a decrease in public companies is because there's a very high cost and standard that you have to meet to be a public company. And also the private equity industry has grown up. So there's other ways to access capital. The pros of being a public company, at least for Innventure, outweighed those issues. It's access to capital, it's access to opportunities. And again, for us, the main pro of being a public company was it allowed our investors a path to liquidity without forcing us to sell businesses. I think every business is unique. For some businesses, it doesn't make sense to go public, but in our case, it made a lot of sense to Diego Calligaro (26:40) Okay. And then speaking about geopolitics instead, so there's a lot of movement in the market now due to the impact of tariff or other situations. Could you tell us maybe if you're being impacted due to this or how you're planning ahead for your companies about this? Roland Austrup (27:00) Yes, that's a good question. And you're correct. These are very interesting times, geopolitically. I don't think this is something we've seen in the past. In terms of impact, you're always impacted when there is risk in the marketplace. We've certainly seen that the markets in general have been very volatile of late. And when that happens and when there's uncertainty, Capital markets dry up, access to capital dries up. People don't make decisions if there's uncertainty in front of them. So the degree to which the current geopolitical issues could cause the need to redefine your business model, lot of the proformers that you had before, a lot of your financial models kind of have to be really rebuilt. And again, the overall ability to attract capital and the overall growth rate of the economies change. In our case, I don't think that the geopolitical issues are creating headwinds beyond the ability to raise capital. And what I mean by that is that, again, we've created disruptive, not disruptive necessarily, transformative businesses, things that transform or evolve, again, data center cooling, sustainable packaging. And as I mentioned earlier, everything we do, we do knowing that we're creating an economic benefit. So the degree to which geopolitical issues cause stress for existing industries and businesses, they're always looking for ways then to reduce costs. So if we can provide an economic value proposition, that's going to be good for us. So geopolitical issues can cause positive effects. for entities that can create economic value or cost savings. Also, when you're transforming industries, a lot of those macro issues, while they exist, they impact more large established businesses because we have so much market to grow into that even if the market as a whole is gonna slow down, we're still needed in that market space. But that doesn't mean we're not negatively impacted. Of course there are negative impacts. Again, as I said, access to capital, current tariffs is an example. While we're majority domestically sourced, again, Excelsior is an example. They do need aluminum and copper. So the degree to which they're subject to tariffs, that's going to impact them. There are some components that they can only get from Asia. Even though the bulk of our supply chain is domestic and not impacted, there will be some impact. but relatively less we think than our peers. ⁓ Diego Calligaro (29:18) Okay, clear. because you're also an economist, investor, you've been running the hedge fund as well. And from the hedge fund perspective, like how this is impacting from your side, Roland Austrup (29:34) Sure. So if you're a long only investor and you have a risk in the marketplace, a shock to the marketplace, and you're in a risk off environment, it's going to impact your rate of return. The idea of a hedge fund is you're supposed to be able to access the return of an underlying asset and hedge the underlying risk. So the question is, do you have hedging strategies? And without going into great detail, yes, we have hedging strategies in our hedge fund. As an example, One of our funds is an all-weather fund, so it has an allocation to equities, fixed income, real estate, but it also has hedging strategies. So it uses a momentum strategy across all asset classes. And momentum strategies tend to turn risks into opportunities. So you can go short commodities, you can go long or short the US dollar or the euro, you can go long or short the direction of interest rates. And the same with commodities, you can go long or short commodities. So the hedge fund business has done well. It's done well because it has exposure to gold. It has some short exposures to commodities that are going down. So it's able to hedge those systematic risks for risk on strategies. yeah, so our hedge funds are performing as we would expect in an environment like this. And that's the whole point of a hedge fund. If you ask, what is a hedge fund supposed to do? It's supposed to, if you're an equity hedge fund, You're supposed to access the return of equity markets, but hedge the systematic risks. That's the whole nature of hedge fund strategies. And again, that's the same with the adventure, which I think is very important though. It's risk mitigation. How do you mitigate risks so that when you have geopolitical shocks, you've mitigated some of those things? again, we can't mitigate equity market risk or economic risk. but we can mitigate many of the risks in early stage company creation such that we could be less impacted. And part of that is capital. We've been able to raise capital. We have technologies that we think have a greater potential of success. For many of the reasons I mentioned before, even the data points of multinational research has a lower risk of technical failure. And, you know, and if you're working with a partner where you've uncovered or a collaborator where you've uncovered that there is an unmet need and you're solving that need, as I mentioned earlier, those geopolitical risks can create opportunities because the larger companies that are impacted are going to look for things where they can get cost savings or where they can get an edge. And if we're providing solutions that provide both an edge and cost savings. we're providing a solution for geopolitical risk for large customers. Diego Calligaro (31:58) And talking about this and disrupting technologies and applied as well, you know, to your hedge funds, as we are also talking about this, what do you see are like those emerging technologies that are actually disrupting as well this industry or where do you see the future going on that industry? Roland Austrup (32:16) In which industry in particular Diego? Sorry. Diego Calligaro (32:18) Touch phones. Roland Austrup (32:19) and the hedge fund. you know, again, the goal of hedge funds are to do better than the benchmark, to mitigate risks, to find new sources of return from those underlying indices. I would say that AI is a very powerful tool for the hedge fund industry. I think you're going to see a lot of innovation in a couple of different ways. I think you can do greater research. Again, it's not that the fundamentals change, but you're able to do deeper research into fundamental relationships and even into investor behavior. How do investors make decisions? One of the things that's different today, if you're building a quantitative strategy, you can now use AI to write code. You can say, want a strategy. that does XYZ and you can get a base code written very quickly and then you can manipulate it versus having to write everything from the ground up. So I think you can write code much more quickly. You can evaluate much more quickly. I think AI and data and I think you're gonna see an evolution in quantitative investment strategies. Quantitative investment strategies have always been there but I think you're gonna see an acceleration in that because you have more powerful tools on the hedge fund side. Diego Calligaro (33:29) Okay. And maybe if you can share with us, always talking about this edge found experience that you had in your past, as you've been there many years. Could you share some lessons learned from the past, maybe, because you've been past also through 2008, many like probably losses or gains as well happened down. Could you share maybe a time in which you... at the large loss and what you've learned from it and how you change as well, know, your strategy back then. Roland Austrup (34:00) Yes. Well, in our hedge fund strategy, risks aren't so much the 08s. As an example, our hedge fund was up over 40 % in 08. So we did well. Again, for the reasons I mentioned before, we can take the short side of markets and the long side of flight to quality assets, like gold or certain currencies or fixed income in 08. For our hedge fund strategy, we have had losses. We had meaningful loss in 2016 to 2019. Our hedge fund strategy really does well whenever there's directionality, but in periods where there's uncertainty, where you're not going up or down, you're just going sideways and the market's flip-flopping. That's when we tend not to do well. That's when our strategy tends not to do well. So lessons learned though, lessons learned were follow your strategy, stay disciplined, don't tweak your model over time. I think one mistake that we had made in our hedge fund strategy is that we did not think that interest rates could go below zero. So we did not continue to use our momentum strategies to maintain long bond positions when interest rates went below zero. And so we didn't get that rate of return and it caused our drawdown to be larger than our peers. So style drift in the hedge fund puts you in a penalty box for a few years. Now we recovered very strongly, but a lot of investors had redeemed and weren't there for the recovery. So lessons learned. Stick to your discipline. And this is both for the hedge fund and for Innventure. And again, this is what attracted me to Innventure. My whole career as a quantitative hedge fund manager is what attracted me to Innventure because they're following a systematic deterministic way to company creation. Stick with your model, stick to your knitting, be disciplined. And if you know the probabilities will work in your favor, you'll get to the right place at the end of the day. Diego Calligaro (35:52) Roland, thanks a lot and maybe a few last questions. If you can share your piece of advice for entrepreneurs who want to billion dollar companies. Roland Austrup (36:02) Yes, I think the thing that I've noticed, the biggest differentiation again between, you know, a company that we would create an Innventure versus a company that an entrepreneur would create. Just because you're a good inventor and you've come up with a good idea doesn't mean you know how to run a business. It's very difficult to run a business. Building a right team is very important. It's not just about having a good idea. It's knowing how to run a good business and how to commercialize the technology. You have to understand supply chain. You have to understand how to raise capital. You have to understand operations, marketing, branding. There are a lot of skill sets. So if you are an entrepreneur and you have a good idea, don't think that because you have a good idea, that means you know how to run a business. Make sure you surround yourself with the talent and build a true operating team that can allow you to mitigate many of the risks and succeed in commercializing your business. Diego Calligaro (36:55) Looking back at your career, what would you have done differently? Roland Austrup (37:00) I don't think I would have done anything differently. think the most important thing I did was understand that you have to develop your own processes. And again, they should be very systematic. They shouldn't be ad hoc. should look at things that work, things that don't work, and then develop processes to focus on things that work. But then you have to be open to what life... puts in front of you. So have systematic discipline processes for how you evaluate and how you grow your career. But be open, don't be rigid, because the world changes in front of us. We don't know what happens tomorrow or how the world's gonna react to it, but the world changes. And so you have to be able to adapt. The adage of survival of the fittest is very real. And adoption and natural selection is very real. So you have to be both... Disciplined, patient, wait for the opportunities, disciplined in your process, and very flexible to the folks that are put in front of you. Diego Calligaro (37:56) And last question here. So looking at the accelerating pace of change that is happening in the world. What are your concerns about the digital future and also what excites you most about the future? Roland Austrup (38:09) I don't have a lot of concerns about the digital future because again, I have a lot of faith in humanity and all you have to do is look at the history, our evolution over thousands of years of growth. There are always things in front of us that create worry. There are always walls of worry, but we have a survivalistic instinct. We tend to find ways to come up with solutions to problems that we face. So I don't really focus on the worries. I really just focus on the opportunities. What really excites me is the amount, and this is what I've seen personally, the amount of innovation that occurs, the amount of R &D that occurs, not just at multinationals, but you can certainly look at multinationals. It is staggering. mean, multinationals spend trillions of dollars a year. on R &D. As I mentioned earlier, about 25 % of that is on things that aren't core to their business. They're looking for brand new innovation. It's exciting. Go to any TED conference, just look online. You get overwhelmed by how much is out there. So I have great confidence in the growth potential and the productivity improvement from all the R &D out there. And I think the digital age has created more of those opportunities for us. We have substantially more opportunities today than we did yesterday. I like to use a line that my son told me. We were talking one day about the future and how advanced and modern we've become. And he said, Dad, we're not modern humans. We're the first recorded generation of ancient history. I mean, I really do think there's a tremendous amount of opportunity in front of us. Diego Calligaro (39:42) Roland it's been such a pleasure speaking with you. Definitely it's gonna be a chance to speak again in the future and wishing you a good day. Roland Austrup (39:50) as well, Diego. Thank you very much for your time today. Have a great day and thank you for having me on today. Okay, bye bye. Diego Calligaro (39:54) Bye.