Unlike many VCs who hold winners indefinitely, LeadEdge has a formal disposition committee that meets monthly. They constantly underwrite the forward IRR of each position and proactively sell, even in secondary markets, if a target return is met early.

Durable Capital's process includes a mandatory three-year look-back for every investment, comparing the original thesis to reality. This is crucial because while small deviations can be excused quarterly, compounding them over 12 quarters reveals significant thesis drift. The formal review forces an intellectually honest assessment of whether a slow-moving problem has become critical.

A VC's job isn't to be a static sector expert but to understand the latest technological innovation (e.g., the iPhone, AI) and invest in its second and third-order effects. M13 pivoted from D2C to commerce infrastructure as the underlying tech wave shifted.

Money is not created, but recycled. When a sector like AI becomes hot, capital flows out of previously favored sectors like SaaS. This creates opportunities for contrarian investors to buy high-quality but now unpopular businesses at depressed prices before the cycle turns again.

Long-term returns are a function of capital supply and demand. Hyped areas like AI have a surplus of capital, competing returns down. True opportunities lie in being the "one banker for 1,000 borrowers"—investing in areas starved for capital, where your money commands a higher expected return.

The best investment opportunities aren't always in glamorous, crowded sectors like tech or healthcare. True competitive advantage comes from identifying and mastering industries with "short lines"—areas with less capital and fewer specialists, such as Main Street franchise businesses.

In the current late-cycle, frothy environment, maintaining investment discipline is paramount. Oaktree, guided by Howard Marks' philosophy, is intentionally cautious and passing on the majority of deals presented. This discipline is crucial for avoiding the "worst deals done in the best of times" and preserving capital for future dislocations.

Brookfield consistently invests in assets forming the "backbone of the global economy." However, the definition of these assets changes with technology. About 70% of their current investments, like data centers and solar farms, are in asset classes that were not investable 15-20 years ago.

Alan Waxman argues that the rapid pace of global change means investment themes are no longer multi-year theses. He believes a theme's shelf life is now just 12 to 36 months, demanding a flexible, multi-strategy approach to constantly migrate capital to the best risk-reward opportunities rather than staying in one vertical.