158. Steve Kim of Verdis Investment Management – Weaving Technology and Data to Discover What Lies in the Variance

Steve Kim is a partner in investment strategy and risk management at Verdis Investment Management in the Philadelphia area. He has focused over 30 years in his career in implementing and managing operating infrastructures. Prior to his role at Verdis held various Chief Technology Officer roles. He now focuses on integrating his insight from systems modeling and data analysis into an investment approach, particularly in the venture capital arena.

We start with Steve’s upbringing and early education and ask how his various Chief Technology Officer roles evolved over time to embrace data and AI, and what the key challenges for such roles are today.

We move then to discuss the insights he brings from this background into investment management, and how he initially underestimated the randomness of returns and the degree to which modeling was a challenge.  His philosophy on life – as well as venture capital – is that variance is where the unicorns lie, that it is only by focusing on achieving maximum variance that we can hope to happen upon true winners.  This is just as true for the value of diversity within organizations.

We focus then on how to achieve scale and efficiency while also achieving variance, which can be a challenge. Our conversation turns to ESG and Steve’s view that technology has greatly accelerated engagement, transparency and the integration of an ESG lens when investing. This is an alluring concept, and one that has not been particularly well developed in the current debate.

Our conversation ends, as usual, with reflections – the reminder to stay humble, and to avoid overly-simplistic reductionist thinking. This is an exceptionally rich and multi-layered discussion like a complex operating system, but one that bears scrutiny, for the many areas of utility it can touch.

Series 4 was sponsored by Alvine Capital.  Founded in 2005, Alvine Capital is a specialist advisor and placement boutique focusing on assisting European Institutional Investors within Alternative Investments.  It partners with best in class managers, adding value to investors by helping to navigate this very fragmented market