Making Billions: The Private Equity Podcast for Fund Managers, Alternative Asset Managers, and Venture Capital Investors
Thanks for listening to another episode of Making Billions with Ryan Miller: The Private Equity Podcast for Fund Managers, Startup Founders, and Venture Capital Investors. This show covers topics connecting you to some of the best investment funds that won in their industry—from making money and motivation to alternative investments, fund managers, entrepreneurs, investors, innovators, capital raisers, money mavericks, and industry titans. If you want to start a business, understand investment funds that won the game, and how the top 0.01% made it, then this show will give you the answers!
Making Billions: The Private Equity Podcast for Fund Managers, Alternative Asset Managers, and Venture Capital Investors
The Secret Sauce Behind Billion Dollar Funds
"RAISE CAPITAL LIKE A LEGEND: https://go.fundraisecapital.co"
How do the world's best fund managers turn every dollar into six, year after year, even when the markets are collapsing? It is not luck or insider tips. They use a repeatable, systematic, almost scientific playbook to build their wealth and sustain extraordinary long-term returns.
In this deep-dive episode of Making Billions, host Ryan Miller pulls back the velvet rope on elite fund management to expose the three powerful levers that differentiate billion-dollar funds from average investors.
Learn how to stop being a gambler reacting to market noise and start building a high-conviction, risk-first investment machine that compounds consistent, small wins into massive wealth.
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[THE HOST]: Ryan is a recovering CFO turned angel investor in technology and energy.
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I want you to write down three major trends you believe will fundamentally reshape the world in the next 5-10 years. I always ask myself, if everything changes, which industries don't?
My name is Ryan Miller, and for the past 15 years, I've helped hundreds of people to raise millions of dollars for their funds and for their startups. If you're serious about raising money, launching your business or taking your life to the next level. This show will give you the answers so that you too can enjoy your pursuit of Making Billions. Let's get into it.
How does the fund turn every dollar into six, year after year for three decades, even when markets are collapsing, it isn't luck, it's not insider tips, and it's definitely isn't just buying a hot stock and holding on. That's way too simple. What if I told you the ultra rich don't just get rich by accident, but they use a repeatable, almost scientific playbook to stay that way, stick around. Because today, we're not just looking at the playbook, we're going to tear out some of the pages for you to use. I'm going to take you behind the Velvet Rope of fund management to uncover the real, actionable secrets. Here we go.
Most investors think billion dollar funds are just a bunch of Wall Street geniuses behind bigger computers. Well, I'm here to tell you that is a miss. The reality is far more intriguing. The absolute top firms like Renaissance Technology, Bridgewater Associates and Citadel don't just hope for good returns, they engineer them. See they consistently make money in up markets, down markets and even sideways markets. But how? Well they use three powerful, repeatable levers. Now you won't be able to copy their every move, they have resources we can only dream of, but you will be able to absolutely copy their thinking. And by the end of this video, you won't just know these three levers you'll have actionable strategies for each one, and I will expose the single biggest mistake that keeps most investors from ever gaining a real edge, so you can stop making the same today.
So let's jump in. You see every legendary fund begins not with a stock pick, but with an obsessive mind building a system. See, these founders are not your typical MBAs who live and breathe quarterly earnings. Take Jim Simmons, for example, he was a code breaker who spent years decoding secrets for the government, not analyzing balance sheets and financial statements his entire world it was mess. He believed that markets held hidden patterns that could be deciphered with algorithms. See, he didn't care about a CEO's opinion, he cared about statistical probabilities. And then there's Ray Dalio. He was obsessed with building an all weather machine, a portfolio that can survive any economic storm. He wasn't focused on predicting the future, but on building a system so robust that it didn't even need to. Or take Ken Griffin, for example, who started trading from his Harvard dorm room with a fax machine and a satellite dish, who went on to build Citadel into a global powerhouse from scratch. See, they all shared one crucial habit, they were driven to build robust, systematic frameworks, to remove emotion and then relentlessly exploit tiny, repeatable edges. They weren't hunting for one massive home run, either. They were building intricate machines designed to hit singles every single day. See, their core belief was that consistent, small wins, when multiplied by precision and scale, would guarantee extraordinary long term returns.
So this is your first actionable takeaway, developing an investment philosophy. So before you buy another stock, another deal, another piece of real estate, I want you to pause and ask yourself, what is my capital raising and investment making system? What is my unique world view on how markets work? Are you a systems builder, or are you just a gambler reacting to headlines over trend lines. See legends built a capital raising, investment making machine first, then they fed the opportunities into that machine. So now let's talk about the first lever I've uncovered that is used by the best funds, I call it the unfair data advantage. This is where the game changes completely. No, it's not insider trading but let's look at Renaissance technologies, legendary medallion funds. They don't hire Wall Street analysts, they hire astrophysicists, linguists and cryptographers. But why? Well, I think it's because the real edge isn't in reading a company's financial report faster. The true advantage is in finding signals that no one else can see. See it in data that traditional investors you don't even know exists. This is the world of alternative data. Imagine using satellite images to count cars in WalMart parking lots to predict their quarterly earnings before they're announced, or analyzing weather patterns to forecast agriculture futures. What about sifting through anonymized credit card transaction data to see which brands are gaining momentum in real time. See, these are the actual methods that have been used by some of the top funds in the world. They turn over positions every few hours, sometimes faster, exploiting tiny inefficiencies discovered through mountains of data. And the takeaway isn't to buy a satellite, it's to start hunting where others are not.
So here's an actionable strategy you can try right now. Become an information Scavenger, not for insider information, but more just how you can deal with this part better than others in your sector. So your mission this week is to find one piece of data about a company, a property in or something in private markets that is not in a headline or a press release, but something that will give you an edge without leveraging any insider trading. Just do your research and build a system of analyzing data that could help you make the right investment decisions that you've cleared with your lawyers and other advisors. So really exploiting those edges, like some of those other examples that I just gave.
So here's one thing that I like to do, and you can try this as well. Go to the SEC Edgar's database. Look up a smaller company you're interested in, one with the market cap of, say, under 2 billion. See, these are often ignored by big analysts. And what I want you to do is read their latest annual report, sometimes called a 10k but jump to the risk factor section. This is where companies have to tell the truth about what could go wrong. So you're going to find a more honest assessment of the business there than in any press release in a headline, and that exercise can help you spot risk areas of companies that may exist in your sector.
The second action that I'd love for you to do is to use some of the free tools. Some of the ones that I use is you can just go to Google Trends and type in a company's flagship product is the search interest growing or declining over the last year. This is a raw, real time indicator of consumer interest that often precedes sales figures. So if you're in private equity, this is a good one to start doing your homework on. So the point is to cultivate a habit of looking for information that isn't already priced into the stock without crossing into the insider trading territory. So if you can do that, then you found your New Edge. Now let's cover the second lever that some of the best funds deploy, I call it the risk first framework. So here's a mindset shift that will change your entire approach. Average investors start by asking, how much can I make? Elite funds start with a different question, how much can I lose? This risk first mindset. It's everything. It's the approach I take in my emerging fund world, and it's changed everything from the deals that are done right down to the culture of analysis that's happening on the front lines in my companies. So let me give you an example. Bridgewater associates, for instance, was built on what Ray Dalio called the holy grail of 15 uncorrelated bets. The core idea was that different assets react differently to economic surprises. So by combining assets that don't move in the same direction, you can now build a portfolio that is resilient to some of those economic shocks. So it's not about being right all the time, it's about making sure you survive and thrive when you're wrong. In other words, in funds, it's not about may the best man win, as much as it is about the last man standing, and effective risk management is right at that core. These funds construct portfolios that no single idea, no single market event, can sink the ship.
So here's how you can apply this powerful principle as you stand up excellence in your fund management practice. First one is stress test your portfolio, just like the pros do. So what I would do here is I would take a look at my current holdings right now. If you would do the same, then ask yourself, what happens to my portfolio, say, if interest rates unexpectedly double, what happens if oil prices unexpectedly collapse, if all your assets would go down together? You're not diversified, you're simply exposed. You simply have a fair weather portfolio, and not an all weather one. So be obsessed with managing the risks, and set the culture as a risk first culture. The second action that you can do is I want you to look for uncorrelated assets. So start thinking in terms of balance. If you own high growth tech stocks that do well when the economy is booming, consider pairing them with something that does well in chaos, like a managed future ETF that tracks trends and commodities and currencies. The goal is to own things that zig when your other assets zag. And the third step is, I want you to be religious and relentless in rebalancing, whether that's different portfolios as you buy and sell, or if you're doing stocks once a quarter, look at your portfolio and trim your winners that have grown too large and add to your losers that are now undervalued. That is one strategy that many try this single action can force you to systematically sell high and buy low, removing emotion from the equation and creating a robust self healing system on your funds.
So now let's cover the third lever, which is what I like to call the owner's timeline. See, Warren Buffett has famously said that his favorite hold period is forever, so billion dollar funds that have clients who demand performance now that can make it challenging. So what's a fund going to do? Well, their solution is a brilliant strategy I like to call time arbitrage. They find trades that compound quickly enough to determine strong returns but last long enough to minimize those transactions costs and taxes. That's where I like to do deals. So instead of day trading a volatile stock or closing on a speculative private equity deal, they might identify a deep, multi year theme, like long term demand for artificial intelligence chips. Then they'll buy the markets of semiconductor equipment during a cyclical downturn, when everybody else is panicking. They'll hold those positions for 12 to 18 months, patiently waiting for the cycle to return, and then they make their move. Now this isn't speculation. It's a strategic play on a timeline that most investors are too impatient for. So many of the best funds use the timeline to their advantage, that's why I call it a lever.
So for this lever, here's your actual framework for mastering this one, first step, identify your core themes. So forget hot stocks or overly hyped silver tsunami companies. I want you to write down three major trends you believe will fundamentally reshape the world in the next 5-10 years. I always ask myself, if everything changes, which industries don't? Is it gene editing? Is it decentralized finance? Is the electrification of the global energy grid. Get specific. This will represent your hunting ground next. The second action to solidify this, it's to build a thematic basket. So once you have a theme, don't just bet on one company to win. If your theme is, say, cyber security, for example, you can look to buy a basket of three to five companies, one leader in endpoint security, one in cloud security, and maybe one in identity management. You're no longer betting on a single horse. You're betting on the race itself. So let's watch these three levers combine into one of the history's most famous traits.
In 1992 George Soros quantum fund targeted the Bank of England, the British pound at the time, it was tagged to the German Mark, at a rate that Soros team identified as fundamentally unsustainable. UK inflation, it was way too high. Interest rates were crippling, and the economy and the peg was a ticking time bomb, and they saw it. They saw a classic asymmetric risk. And if they were wrong, the downside it was minimal, but if they were right, the upside was massive. So they built a huge short position, borrowing billions of pounds and selling them on the open market. The Bank of England, it fought back, but the pressure was too immense, and on September 16, 1992 sometimes called Black Wednesday, the UK was forced to devalue the pound. Soros' fund reportedly made over a billion dollars from that one trade. See, this was the playbook in action. They utilized lever one, the data edge, deep analysis of economic fundamentals that showed the currency peg was mathematically impossible and it was waiting to break. Then they utilized the second lever, risk for sizing, recognizing the asymmetric opportunity and sizing the bet to have a capped, manageable loss, but at an enormous potential gain. And finally, they utilize the third lever, the owner's timeline, the conviction to hold the position for months, weathering the political noise and waiting for the inevitable economic reality to assert itself. So they leaned in, and the lesson was profound.
When your data, your risk management and your timeline align, that's when you make a high conviction investment. The rest of the time you bet small or not at all.
Hey, thanks for listening to Making Billions. If you liked this episode, could you do me a huge favor and go leave a review? This helps us to get the podcast to more ears, to help people raise capital, learn fund management strategies and serve our mission, to help fund managers and deal syndicators to gain greater hope and focus as they build their empire. All right, let's get back to the show.
Now, what about the single biggest mistake that holds most investors back. Most of us get the entire process backwards. We start with a tip on a deal or an equity offering from a friend or we heard it somewhere in the news, then we might sprinkle on some vague risk management like a mental stop loss that we never really stick to. And finally, we completely ignore clean data, letting emotion and hype drive our decisions. We chase past winners, hold on to losers for way too long and sell winners far too early. Gross, just gross. You see the pros flip this pyramid completely upside down. It's a new order of operations, and this is your most important takeaway. Before you even think about buying you should make sure it passes the three levers that I taught you, the data lever, ask the question, what is my information edge? What unique data or insights do I or my partners have that the rest of the market is missing? The second one is the risk lever. And ask yourself this question, what is my maximum tolerable loss on this position, defined in dollars before I invest in this deal or stock. And third is the time lever. And ask yourself the question, what is my expected holding period for this thesis to play out, and am I prepared to ignore the noise during that time? If you can't, clearly and confidently answer all three of those questions. You do not do the deal, period, full stop. You're not investing. You're gambling, and the house always wins.
So let's land the plane billion dollar funds. They're not magic. They're disciplined systems on executing three core levers, an edge in data, a fanatical devotion to risk management and a mastery of time. You cannot rent their super computers or access their wildly paid analysts, but you can adopt their mindset, that's what we're talking about. You can install their operating system in your own funds by doing it through the mindset. You can start small, as long as you start so your homework is this. This week, take one investment idea and run it through the three question checklists on those three levers, swap one emotionally charged decision or one that is data driven. So instead of asking, how much can you make, define exactly how much you are willing to lose. Then give that single well structured investment enough time to breathe. Do this once, and you'll feel the power. Do it consistently, and you'll watch your fund transform. See the journey to financial mastery isn't about a magic bullet. It's about applying proven principles with an unwavering discipline. So let me know which of these three levers, data, risk or time, do you feel like is your weakest link right now, drop your answer in the comments, and I read and reply to almost every comment as fast as I can. And if you want more deep dives into the frameworks of some of the world's greatest fund managers, hit that subscribe button so you don't miss the next secret we unlock in your pursuit of Making Billions.
Wow, what a show. I hope you enjoyed this episode as much as I did. Now if you haven't done so already, be sure to leave a comment and review on new ideas and guests you want me to bring on for future episodes. Plus, why don't you head over to YouTube and see extra takes while you get to know our guests even better, and make sure to come back for our next episode, where we dive even deeper into the people, the process and the perspectives of both investors and founders. Until then, my friends, stay hungry, focus on your goals and keep grinding towards your dream of Making Billions.
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