Yale Prepares to Take Its Succession Test – The Wall Street Journal


Investment pioneer David Swensen was the face of Yale University’s endowment for more than 35 years before he died last week. Behind the scenes, Yale began confronting a future without him years ago.

The university has ramped up preparations for this moment since Mr. Swensen was diagnosed with late-stage renal cancer in 2012, said people familiar with the matter. His illness brought new urgency to succession planning on the part of both Mr. Swensen and Yale.

David Swensen, who died last week, kept and regularly revised a list of potential successors. He is shown in 2014.

Photo: Michael Marsland/Yale University

In the years after his diagnosis, Mr. Swensen gave regular updates on his health to Yale’s investment committee. He also kept and regularly revised a list of potential successors. He discussed what he viewed as their strengths and weaknesses with people who will play a role in determining who gets the job, including Yale President Peter Salovey and some members of the endowment’s investment committee, said some of the people.

Some of these candidates work at the Yale Investments Office, as the endowment is known, while others were external candidates. Mr. Swensen’s thoughts are expected to inform how Yale’s leadership weighs how to replace the unofficial dean of endowment investing.

Yale on Friday said it would announce a process for appointing a new investment chief; the people familiar with the matter said Yale plans to conduct a search. University trustees recognize that the role will evolve with a new investment chief, said one of the people. Still, the person said trustees believe Mr. Swensen built an endowment culture and framework that will endure.

Mr. Swensen’s long tenure created immense wealth for the Ivy League university. He outlasted several Yale presidents and oversaw the endowment’s growth from $1 billion when he started in 1985 to $31.2 billion as of June 2020.

His investment philosophy reshaped the way endowments and foundations invest, transforming the business of endowment management from a backwater function to a prestigious business.

He advocated that large investors should embrace venture capital and private equity. The endowment model’s widespread adoption helped create an arms race to accumulate ever-bigger war chests to fund student scholarships and faculty salaries as the costs of higher education soared.

The question of when, or whether, Mr. Swensen would step down, was a delicate one.

Mr. Swensen at one point told senior Yale administrators and advisers that he planned to retire in late 2022, saying he wanted to spend more time with his family, one of the people familiar with the matter said. As the date drew closer, Mr. Swensen changed his mind, saying he felt tremendously energized.

Mr. Swensen’s long tenure created immense wealth for the Ivy League university, whose campus is shown last September.

Photo: Steven Molina Contreras for The Wall Street Journal

He sometimes said he didn’t think he would stay on in his post past age 70. He died at 67.

At least one contingency plan was upended. That plan had longtime endowment Senior Director Dean Takahashi being named interim investment chief in the event of an emergency, said people familiar with the plan, but Mr. Takahashi stepped down in 2019 to focus on climate-change initiatives at Yale.

Mr. Swensen was given a slim chance of surviving beyond five years when he was diagnosed with cancer. He went on to defy the odds.

He tapped into his vast network to assemble a team of doctors across institutions that met virtually to discuss his health and treatment plans. Mr. Swensen’s wife, former Yale tennis coach Meghan McMahon, and his brother, a doctor, were actively involved in his care.


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At work, he pared back his travel schedule, with others at the endowment adding to their travels to meet with outside managers investing Yale’s money. At one point, Mr. Swensen began using a cane. Some of Yale’s existing and prospective managers traveled to the endowment’s office in New Haven, Conn., more frequently. Ms. McMahon accompanied Mr. Swensen on many of his travels.

Still, Mr. Swensen remained actively engaged in the endowment’s work.

He kept on teaching students about investing, a priority of his for decades. He also continued his work as de facto editor for every memo written at the endowment on any major investment decision. He believed writing would expose flaws in thinking and had made drafting memos a core part of Yale’s investment process.

During the pandemic, he continued to meet with potential employees and prospective money managers that Yale was considering giving money to in a tented meadow near his home in Killingworth, Conn.

Mr. Swensen through the years provided quarterly updates to the investment committee on his health. Friends, including longtime money managers for Yale, say Mr. Swensen was open about how he was doing on any given day, sharing details about his latest checkup or a new therapy that showed potential.

Write to Juliet Chung at juliet.chung@wsj.com and Dawn Lim at dawn.lim@wsj.com

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