E351: How a16z Built a Family Office From First Principles

Michel Del Buono, CIO of a16z Perennial, examines the structural evolution of wealth management and the specific needs of taxable investors. The traditional multi-family office model often suffers from principal-agent misalignments where firms prioritize relationship fees over investment acumen. Building a sophisticated investment team requires significant scale—ideally $15 to $20 billion in assets—to support global multi-asset strategies and direct investing capabilities. For high-net-worth individuals, a "90-10" portfolio allocation can be a valid strategy if the liquid 10% covers lifetime needs, allowing the remainder to capture high-dispersion returns in asset classes like venture capital. Generating "tax alpha" through tax-loss harvesting and specialized real estate structures, such as evergreen funds that utilize depreciation and cash-out refinancing, provides a more reliable performance edge than traditional manager selection. Ultimately, successful long-term investing for individuals hinges on aligning portfolio construction with personal psychology and liquidity requirements rather than adhering to institutional dogmas.