Training Grounds – Carnegie Corporation of New York (EP.377)

Episode Summary

Executive Summary: The episode examines Carnegie Corporation of New York as a talent factory for investment leaders, tracing how Ellen Schuman, Meredith Jenkins, Kim Liu, and Elisa Moll built a high-trust, apprenticeship-driven culture that produced numerous future CIOs. The conversation highlights small-team investing, deep memo-based diligence, mission alignment, governance, risk-taking, and how Carnegie-trained investors carried those lessons into new roles.

Main Topics: Carnegie as an allocator training ground (Priority: 5/5): The discussion centers on how Carnegie produced an outsized number of CIOs relative to team size, making it a model for developing investment leaders through hands-on responsibility and shared culture. Building the investment office from scratch (Priority: 5/5): Ellen Schuman describes arriving as Carnegie’s first CIO, deciding what not to do, building the portfolio gradually, and relying on mission alignment and early luck in hedge funds and private markets. Apprenticeship and team-based decision-making (Priority: 5/5): The team learned through close observation, extensive written memos, shared editing, and collective discussion that blended autonomy with accountability and built judgment over time. Culture, trust, and talent identification (Priority: 5/5): A recurring theme is hiring for raw talent and character over pedigree, giving people rope, and creating a culture where disagreement was welcomed and development was intentional. Leadership transitions and succession (Priority: 4/5): The episode follows the shift from Ellen to co-CIOs Meredith and Kim, then to Kim alone, showing how each transition changed structure, responsibilities, and growth opportunities for the team. Career development beyond Carnegie (Priority: 4/5): Several guests describe leaving Carnegie for new challenges, with the institution encouraging public engagement, external exploration, and portable leadership skills rather than career stasis. Governance and portfolio discipline (Priority: 4/5): The group emphasizes the value of strong governance, active investment committee support, and a mature portfolio where changes were made incrementally and with conviction.

Key Arguments: A small, mission-driven team can develop exceptional investors when responsibility, autonomy, and feedback are combined. Hiring for talent and judgment can outperform rigid screens for experience or pedigree, especially when the CIO can spot potential and coach it. Extensive investment memos and shared editing create institutional memory, clarify risk, and train the whole team, not just the lead analyst. The best CIOs balance empowerment with final accountability: the team should own ideas, but the CIO must protect the portfolio. Strong governance that understands the process and supports thoughtful risk-taking enables early, contrarian investments. A mature portfolio requires more structure, specialization, and process than a startup-like crisis environment. Career growth is improved when leaders encourage staff to explore roles outside the institution and build broader reputations. Many lessons from Carnegie transfer to other contexts, but family offices and single-capital-owner environments require adaptation rather than direct replication.

Data Points: Assets under management at Ellen Schuman’s start: $1.6 billion - Initial Carnegie pool when she became the first CIO Time at Carnegie: 12 years and 7 months - Ellen Schuman’s tenure before leaving Time at Yale before Carnegie: 12 years and 7 months - Ellen notes the symmetry of her career timing Investment professionals who became CIOs: 8 of 17 - Carnegie team members who walked in the door during the early era Foundation size comparison: Carnegie was about $3 billion vs. Ford Foundation about $10–11 billion - Kim Liu describes the scale difference when she moved to Carnegie Private portfolio shock in 2008: Distributions stopped; calls continued - Elisa Moll recalls the portfolio stress during the financial crisis Portfolio performance during 2001 downturn: ACQ was down 16%; portfolio was flat - Ellen cites the benefit of early hedge fund setup Asset allocation changes: Typically increments of 2.5% - Ellen describes how changes were made over time Board/book production process: Thousands of pages - Team manually compiled printed investment committee books Regional team trips: Every 3 years - Kim describes team trips to a geography for learning and relationship-building Memo length: 8 to 12 pages - Later at Michael Dell’s family office, Lisa adopts Carnegie-style memo discipline

Pivotal Quotes: "What am I not going to do?" — Ellen Schuman: Her framework for triaging priorities when building Carnegie’s investment office from scratch "There's nothing you're going to do that we can't fix. So take risk, go out there, just start going." — Kim Liu referencing Betty Fagan: A core lesson about empowering people to make decisions without fear of failure "If you have captive capital and you have good governance, it is nirvana." — Elisa Moll: Her summary of why Carnegie’s governance and mandate were unusually effective

Implications: For allocators, the episode shows that durable talent pipelines come from trust, mission, apprenticeship, and thoughtful risk-taking. The Carnegie model suggests strong governance and a learning culture can outperform rigid hierarchy and create leaders who transfer best practices across institutions.