Stad on organic mentorship, investment conviction, and advice for graduates

The host also mentioned that Stad recently became the controlling owner and largest shareholder of the NBA's Minnesota Timberwolves and Minnesota Lynx.

As a strong student who applied to about 21 colleges, Stad went on to Harvard.

Targeting mentors deliberately would be a mistake, because the relationship has to run both ways. He described an early moment at TPG, where as a young associate he helped David Bonderman with a hotel deal he knew nothing about, learning the sector as he went.

IGSB taught Stad to look for companies with wide moats, strong long-run free cash flow, great founders, large addressable markets, and a margin of safety. The seven rules were written on a whiteboard, and companies usually violate at least one of them, according to Stad.

Flexible, permanent capital gives the firm room to wait for the right opportunity, where a very small number of companies drive returns.

Early fundraising meant investors wanted to slot him into a fund category such as hedge fund, long-only or private equity. He advised students to seek mentorship, get trained before starting a firm, and not simply create something that already exists.

Asked why he put his full internship allocation into one company despite advice to diversify, Stad answered that diversifying too much makes it hard to beat the market. Dragoneer's approach is to wait for very high conviction and then swing hard, rather than make many low- or medium-conviction bets.

During his MBA, he was convinced MercadoLibre at $18 beat the sixth-best idea, so swinging hard made more sense than diversifying for its own sake.

Stad turned the question around and asked what current leaders should do to change the world positively. As people age they grow realistic or pessimistic, while students bring hope and energy, and mentors such as Reese, Tim and Bondo valued having young people around.