Veteran CIO Amy Falls Has a Plan for the $12 Billion Northwestern Endowment
The Rockefeller University investment chief has a successful track record of making concentrated bets and taking risks on new talent — and she’s bringing those skills to Evanston.
When long-time endowment chief Will McLean left Northwestern University after 18 years as CIO, he created a rare job opportunity: the chance to lead a $12 billion portfolio at a prestigious academic institution. After a competitive search, Rockefeller University CIO Amy Falls was chosen as the Chicago-area university’s next investment leader. In an interview with Institutional Investor’s deputy editor Leanna Orr, Falls shares what it was like to recruit for the high-level position in the midst of a pandemic — and her plans for when she takes over the investment office in May.
Institutional Investor: What drew you to Northwestern?
Amy Falls: The opportunity to serve a great university is exciting, and Northwestern is really moving on all cylinders. It’s the research aspects, the undergraduate program, and the music school. So, it’s a center of excellence and a part of the country that I’m deeply attached to. I grew up in Chicago and I’m excited to be going back to the Chicago area.
I also, frankly, was very intrigued and excited at the opportunity to work with students again and undergraduates. I taught when I was at Andover and I’m looking forward to trying to do some teaching at Northwestern. Rockefeller is a wonderful, amazing place, but it’s very much devoted to science and postdocs and graduate students, so there really isn’t an undergraduate community. So for me, the opportunity to interact with students is very exciting.
Northwestern like many universities is doing an incredible job reaching a broader group of students and the endowment resources are critical to that. I feel like Northwestern does use the endowment and could benefit from growth in the endowment. So, I’m excited to be able to join such a powerful organization as it continues to expand its mission.
II: What do you plan or aspire to bring to the endowment that it hasn’t had before?
Falls: This is a very well-established office and my predecessor had an 18-year track record and a very mature, experienced team. It’s important to work well with what is already a very established and good organization. I just want to build on that strength. I’m a believer in concentrating your portfolio, which is obviously a different exercise at $12 billion than at $2 billion. But I’m looking forward to working with the team to make sure that we’re really, with our highest conviction managers, putting sufficient resources in their hands so that they can really have an impact on performance.
I do think there are interesting new areas opening up in the investment landscape and the pandemic has accelerated some of those areas. So I [plan on] continuing to evolve the portfolio, particularly in areas like venture capital, where the ability of technology to solve problems may be migrating from social media and communications technology to other kinds of technology.
II: In VC specifically, I have heard from CIOs that it can be so hard to get into the highest performing VC firms. How will you handle the access problem with venture capital?
Falls: When I started at Rockefeller, we didn’t have that much of a venture program, and that was sort of the same story. Our venture program, I don’t even want to tell you how good the returns were last year and even for this calendar year. But I think the key is not necessarily to try to get access to funds that are already heavily invested, because that’s almost like a zero sum game. If you can get the access, then you’re probably pushing someone else out, or [the fund is] going to outgrow what is a healthy asset size.
What we found at Rockefeller was that there were new funds and new areas where technology was solving problems. A fund that now everyone talks about is Emergence. When I joined Rockefeller, they were still not a household name. We happened to have an investment, we built on that investment, and they’re phenomenal. They’ve been one of the top performers in our portfolio, and there are other funds like that, like we just recently backed 645 Ventures, which is a wonderful young group [led by] two African Americans. But I also think it’s important to follow innovation.
There may be areas in biotech, for example, where a place like Northwestern may have great insight because they’re doing a lot of important research, and we could get a little bit ahead of some of the newer entrants. In some ways, venture is about intellectual capital. If we think about where technology can really solve problems, there are some important problems looming, particularly around climate, but also around disease.
The important thing for me is trying to get on the bus. A powerful bus for the last decade is both hard and not necessarily the best use of time, but I think there are always young people coming up and they’re discoverable. It is a little risky sometimes, but it’s important to try to keep an open mind. You have to be cautious and not rush these programs; any private capital program should be taken slowly and carefully. There is a good investment program already at Northwestern, but I think the future will look different than the past. The key is to try to find where are there new and exciting people.
I think the same thing is somewhat true even in the hedge fund space. Some of the legends are now maybe not the places you want to go, but there’s new firms coming up. So, access is always an issue. It’s harder the bigger you are, but there’s also new opportunities, so it’s important to just stay open-minded.
II: What about the team? There’s often some anxiety, regardless of industry, when a new boss arrives, and a great part of starting a new job can often be building a team. When you took over at Rockefeller University, you sort of started with a clean slate. How will you approach building or keeping or developing a team?
Falls: I think this is a very good, established team. Of course, it’s early days. I look forward to working with this team and building on their expertise. Rockefeller University was much smaller and there had been a fair amount of turnover. This is an organization where there’s been some turnover, but there’s a lot of stability too, so I think it’s important to preserve that and to build on the strength that’s there. I’m excited about this team. It’s very collegial.
There’s a lot of debate about the generalist model or the sector specialist model, and I think you have to have a little bit of both. I really like collaborative teams where everybody thinks about all the investments, even if you have an element of specialization. Otherwise you can get wedded to your box and then it’s hard to allocate capital across boxes.
II: Are you open to hearing from talent who want to join you, or should they hold their horses?
Falls: At this stage, I think we’ve got a lot of team to work with and I would see working with the team we have for the foreseeable future. I’m quite interested in developing an active analyst program — that’s been really fun and exciting at Rockefeller.
We’re small, so we have one analyst a year, but I think it’s a great way for young people before business school to get a broad exposure to the asset management industry. I have found just wonderful young people, and I imagine being on a university campus, you might even have better flow. I think it’s an important way too to potentially encourage young people who might not otherwise think about the asset management industry. I feel quite excited about the prospect of to some extent copying David Swensen, trying to teach and develop some undergraduate program that might attract people to the asset management industry, and then have some of those people go through the office.
Even at Rockefeller, two of the senior people actually came as analysts. Just over the decade I was there, we had, I don’t know, something like 20 analysts and several of them have stayed.
II: If we can just talk about some of the logistics of how you got a job at this level and taking over a team when travel and in-person meetings are so difficult. Did you ever interview in-person for the job or was it all over the internet?
Falls: I did, I did. This was Chicago, I just want to remind you. It was winter and I had a couple of interviews outside. One there was a heater; one we were walking fast and I wish I had had a hat, but I didn’t. So I did do a little bit of in-person interviewing, particularly with the CFO and the chair of the investment committee, where those relationships are so important. Much was on Zoom. Zoom, we’ve all gotten better at, but I am very anxious to get out there in-person and be in a face-to-face setting as soon as it’s safe to do so.
I’m not going to make anyone walk around in minus-10 degree weather — which I didn’t; it was November or December so it wasn’t quite that cold. But as the spring comes, the sooner we can all be together, the better. With my team at Rockefeller, we’re doing the job as well as we can, but I don’t feel that the ancillary thinking — which I think is often the most important kind of thinking — is so easy when you have an hour and a half Zoom. It’s kind of like the difference between buying a book on Amazon and going to a great bookstore. You can get it done, but you’re not going to see that other thing out of the corner of your eye.
So I really miss being in-person, and hopefully, God-willing we’ll all be back in places where we can be together going forward. As much as I appreciate Zoom and the technology, I think it’s important to build relationships.
II: How does your husband [Hamilton Lane chairman Hartley Rogers] feel about being the least successful person in the marriage?
Falls: [laughing] He’s very humble about it. People keep saying, “Really? He’s going to move to Chicago?” Yeah, he is. Who you marry, it’s really important. It’s one thing to have a husband who says, “I would never stand in your way.” It’s another to have a partner who truly supports you. In life, sometimes one person has the opportunity, sometimes the other one does. It’s really lucky when you can count on your partner to be like, “Okay, fun. Fun, new adventure, let’s go.”