by Patrick O’Shaughnessy
My guest this week is Ryan Caldbeck, a private equity investor who wants to bring quantitative rigor to the private markets. Ryan is the CEO of Circle Up, which uses a system it calls Helio to identify attractive investments in early-stage consumer brands.
While I am of course a fan of quantitative investing, I also know from experience how much harder private markets are than public markets when it comes to the transactions themselves. We discuss this and many other potential roadblocks to bringing models to private markets.
Using many individual companies as examples, Ryan explains some of the major predictive factors they’ve uncovered in their research. We also discuss which parts of the private markets might be infiltrated by quant processes first, and which may never be.
I expect many more to go on a journey similar to Ryan’s in the years to come. They serve as an interesting example for ambitious investors out there.
Please enjoy our conversation.
1:39 – (First Question) – Formation of Helio
6:57 – How they handle the relationship building needed to make investments in private markets
10:26 – Why consumer and retail are interesting spaces to apply their quantitative approach in private markets
12:54 – Searching for new relevant data
16:14 – How do they stay ahead of the commoditization of uniqueness
17:24 – Sam Hinkie Podcast Episode
18:00 – Dominant predictive factors in this world
21:05 – Which is more important, relative value or rate of change
21:48 – What does the data say about online sales vs offline (being in a store)
23:30 – Variable that consumer investors think matters but it doesn’t
24:53 – Valuing companies and accounting for mispricing’s
25:36 – Michael Recce Podcast Episode
26:41 – Goes through the process using Liquid Ivy as an example
28:46 – Most interesting sub-categories
29:33 – Future for this model
32:10 – Albert Wenger Podcast Episode
35:19 – Other categories outside consumer and retail interest Ryan
36:28 – Biggest challenges for CircleUp as a business
38:46 – Handicapping their earnings expectations
41:36 – Take on the VC/PE landscape
43:03 – The types of models that are most interesting to the team
45:05 – Quantitative elements of brand that are most interesting
47:30 – Most unique brand and distribution strategy he’s come across
53:27 – Who has influenced Ryan the most
54:37 – His personal values
55:51 – More people who had an influence on Ryan
57:07 – Thoughts on goal setting at the company
59:29 – Unchangeable factors that shape their long-term vision
1:02:01 – Most interesting individual conversation as part of this journey
1:04:02 – If he could only keep one dataset, what would he keep
1:05:09 – kindest thing anyone has done for Ryan